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Election results showing a sweep for Democrats have sent solar stocks higher, as the outcome protects the current system of federal tax credits. First Solar is a primary beneficiary of these subsidies, which pay the company for every solar panel it makes in its American factories.
These credits are a major part of the company's profit. A different election outcome could have led to a repeal of these incentives, which would have fundamentally changed the math for the business. With the current policy now likely to stay in place, the company has a clearer path to continue its massive manufacturing expansion through 2027.
Source: Market Watch
GLJ Research lowered its rating on First Solar from a buy to a hold on Friday. This change in view comes just after the company reported its latest quarterly earnings and shared its outlook for the coming year.
While the company is still growing, a downgrade like this often suggests an analyst believes the stock's price already reflects its potential or that they see new risks ahead. This was the only major rating change for the company this week, and the average price target across all firms now sits at about $266.
Source: GLJ Research
First Solar signed a licensing deal with CubicPV to use its US patents for perovskite technology. Perovskite is a material that can be used to create solar cells that are potentially more efficient and cheaper to produce than the standard technology used today.
This move helps clear the path for First Solar to develop next-generation panels for large-scale power plants. While the company is already a leader in domestic manufacturing, staying ahead on technology is vital to keeping its edge as rivals try to catch up with its efficiency and cost advantages.
Source: Business Wire
After First Solar's October results, we updated our revenue and profit projections for the next two years. We reset our expectations for how quickly the company can ramp up production at its new factories and added the impact of trade protections for domestic solar panels to what we track. We have also started accounting for the company’s new $500 million plan to buy back its own shares and dropped our assumption for the total volume of future sales under contract.
Guggenheim nudged its target for the stock up from $282 to $299. This move reflects a positive view of the company's ability to grow its manufacturing capacity in the U.S. and benefit from tax credits. The new target is well above the current price and the average analyst target of $271.
Source: Guggenheim
Management consistently sets a bar they can clear, beating profit targets in most quarters even when sales volume fluctuates. This suggests they have a firm handle on their costs and the timing of their large factory projects.
| Expectation | |
|---|---|
| EPS | $5.27 |
| Revenue | $1.48B |
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