On Monday, JPMorgan maintained an Overweight rating on shares of First Solar (NASDAQ:FSLR), following a Spotlight Series call with the company's CFO. First Solar expressed confidence in its strategic positioning, emphasizing its selective approach to bookings during the fiscal year 2024 in anticipation of the upcoming election.
The firm's backlog, which is slightly overbooked, takes into consideration the natural delays in project timelines, which they believe positions them well.
The solar power company sees the 45X manufacturing tax credits as a relatively stable incentive, given its alignment with job creation goals. This view contrasts with other parts of the Inflation Reduction Act, where there may be more uncertainty.
First Solar's management acknowledged the industry-wide challenges of equipment shortages and interconnection delays but feels their current backlog strategy adequately addresses potential project development setbacks.
First Solar's management also noted the issues facing project development timelines, with equipment shortages, such as transformers, and interconnection delays being the primary concerns. Despite these challenges, the company's proactive backlog management is intended to mitigate the impact of such delays, ensuring a more predictable project flow.
The company's strategic selectivity in project bookings for the fiscal year 2024 is part of its preparation for potential shifts in the political landscape due to the upcoming election. This cautious approach is designed to safeguard the company's interests and maintain its competitive edge in the solar industry.
JPMorgan's reiteration of the Overweight rating reflects confidence in First Solar's business strategy and its ability to navigate the operational challenges within the solar power sector. The company's focus on managing its backlog and leveraging tax credits aimed at job creation appears to underpin this positive outlook.
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