Jefferies trims First Solar stock target, keeps buy ahead of earnings season

On Thursday, Jefferies maintained its Buy rating on First Solar (NASDAQ:FSLR) but adjusted the stock's price target to $266 from $271. The firm anticipates the upcoming earnings season to spotlight potential delays, the impact on module pricing from anti-dumping and countervailing duty (AD/CVD) decisions, and the prospects of selling excess capacity from India into the U.S. market.

The analyst expects First Solar to slightly miss the consensus estimates in the third quarter due to lower volume. Moreover, Jefferies has reduced its volume estimates for the years 2025 and 2026, which are now 8% and 4% below the consensus, respectively. The firm's projections are also beneath the company's 2024 guidance and suggest there may be risk to the full-year range.

Despite these short-term challenges, Jefferies expresses confidence in the potential for average selling price (ASP) upside for First Solar. The firm's stance remains positive based on the long-term outlook for the company's pricing power.

The price target revision reflects a cautious approach in the near term, acknowledging potential headwinds that First Solar may face. The adjustment is in response to the firm's updated volume expectations and the broader industry context affecting First Solar's operations.

Jefferies' report indicates that while there are immediate concerns, the firm's long-term perspective on First Solar's market position and financial performance remains optimistic. The new price target of $266 signifies Jefferies' continued endorsement of the stock as a Buy despite the anticipated near-term volatility.

In other recent news, First Solar, a leading solar panel manufacturer, has been the focus of various analyst firms. HSBC initiated coverage on First Solar shares with a Buy rating, citing the company's growth potential and earnings visibility.

Similarly, BofA Securities maintained a Buy rating on First Solar, despite revising their price target to $321.00 due to potential project delays. KeyBanc maintained a Sector Weight rating on the company due to potential disruptions from a union strike at the Houston Port, while Barclays reaffirmed an Overweight rating despite potential risks to First Solar's fiscal year guidance.

First Solar is also expected to benefit from the U.S. Department of Commerce's recent decision to impose preliminary countervailing duties on solar imports from Southeast Asian countries. This move could make First Solar's domestically manufactured panels more competitively priced. However, the company also faces potential disruptions due to a union strike at the Houston Port.

In other developments, First Solar recently inaugurated a $1.1 billion solar manufacturing facility in Alabama. Additionally, George Burdette was appointed as the new Chief Financial Officer for Verde Clean Fuels, a company where Burdette previously held the position of head of project finance.

These recent developments provide an insight into the company's current situation and its future prospects, as assessed by various analysts. It is important for investors to consider these factors while making decisions related to First Solar.

InvestingPro Insights

To complement Jefferies' analysis, recent data from InvestingPro offers additional context on First Solar's financial position. The company's market capitalization stands at $24.2 billion, with a P/E ratio of 20.09, suggesting a moderate valuation relative to earnings. First Solar's revenue growth of 25.88% over the last twelve months aligns with Jefferies' positive long-term outlook, despite potential near-term volume challenges.

InvestingPro Tips highlight First Solar's financial strength, noting that the company "holds more cash than debt on its balance sheet" and "liquid assets exceed short-term obligations." These factors could provide a buffer against the short-term headwinds mentioned in the Jefferies report. Moreover, the tip that "analysts anticipate sales growth in the current year" supports the overall bullish stance, even as volume estimates for future years have been reduced.

It's worth noting that InvestingPro offers 8 additional tips for First Solar, providing investors with a more comprehensive analysis of the company's prospects. These insights could be particularly valuable in light of the upcoming earnings season and potential industry shifts mentioned in the article.

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