By Sam Boughedda
A BofA Securities analyst upgraded shares of First Solar (NASDAQ:FSLR) to Neutral from Underperform, maintaining a $104.50 price target.
He said they see long-term value in the company given its "exposure to favorable policy catalysts and improved 2025 profitability outlook."
"While the recent Inflation Reduction Act (IRA), if passed as currently written, would potentially support up to $570mn in production tax credits annually tied to FSLR’s 3.3GW Ohio factory, we view US trade policy as just as, if not more critical to FSLR’s long term growth and profitability," wrote the analyst. "Given the commoditized nature of the solar panel market and FSLR’s higher cost panels vs Chinese and Si-derived peers, FSLR LT earnings are predicated on continued protectionist policy. For example, the DoC’s decision on AD/CVD in August has meaningful implications for 2025+ earnings: a positive decision likely augments FSLR pricing power for 2025+ bookings, while a negative decision would reignite competition risk."
The analyst explained that "AD/CVD outcome is key even in determining IRA’s LT value: tax credits 2025+ likely accrue to customers in a competitive market."
"While IRA implies significant NT earnings uplift, we are Neutral on share of FSLR as policy uncertainty implies both elevated upside and downside risks," he concluded.