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Solar stocks are in the spotlight again as the U.S. government’s latest anti-dumping tariffs aim to boost domestic manufacturing and reshape the renewable energy landscape. Regulators believe that China has at least 80% of global market share in solar panel manufacturing, and that Chinese producers are routing cells through Southeast Asian countries including Malaysia, Vietnam, Cambodia, and Thailand. This has led to tariffs that range from 21.3% for Malaysia to 271.28% for Vietnam. Analysts predict that these measures will accelerate the long-term growth of U.S.-based solar production.
In 2023, the U.S. added a record-breaking 32.4 gigawatts of solar power, making solar the dominant source for new electricity generation capacity. For the first time, it accounted for over half of all new capacity in the country. Despite broader economic challenges, this momentum has carried into 2024, reflecting investor confidence.
Amid these shifts, First Solar (FSLR) has emerged as a frontrunner in the renewable energy landscape. With its U.S.-based manufacturing model and policy-driven advantages, First Solar is uniquely positioned to benefit from these changes.
About First Solar Stock
Based in Tempe, Arizona, First Solar (FSLR) is one of the leading players in U.S.-manufactured solar technology, specializing in advanced thin-film photovoltaic modules for utility-scale projects. The company has made substantial investments in expanding production capacity, including new facilities in Alabama and Ohio, which aim to deliver an impressive 12GW annually. With a strategic focus on scaling its operations and leveraging policy-driven incentives, First Solar is well-positioned as a top contender in the renewable energy sector entering 2025. Currently, the company boasts a solid market capitalization of $18.3 billion, reflecting its stronghold in the industry.
FSLR stock underperformed this year with only a 5% year-to-date climb, shy of the broader S&P 500 Index ($SPX) gain of 24.8%. The stock is currently trading at 40% below its 52-week high of $306.77, which could be a compelling entry point for some investors.
From a valuation standpoint, a forward price-earnings ratio of 13.27x makes the stock look cheap compared to the sector median of 31x. Thus, FSLR stands out as one of the most attractive stocks to buy on the dip.
First Solar Achieves Record Production in Q3
First Solar reported its third-quarter results at the end of October, including an impressive $887 million in revenue, reflecting 10.7% year-over-year growth. EPS surged by 16% to $2.91 per share.
The company achieved a record-breaking 3.8 gigawatts (GW) of solar module production in Q3, emphasizing its robust manufacturing capabilities. Strategic investments in U.S.-based facilities also gained momentum, with a $1.1 billion manufacturing plant in Alabama adding 3.5 GW of capacity. A planned Louisiana facility, expected in 2025, will further enhance output, and by 2026, production capacity is targeted to grow from 16.6 GW to 25.2 GW.
Furthermore, First Solar demonstrates strong long-term revenue visibility with a contracted backlog of 73 GW and a solid financial position. The company ended Q3 with $700 million in net cash, although this decreased from $1.2 billion in the previous quarter due to capital expenditures for new U.S. factories in Alabama and Louisiana. Management expects to maintain a net cash balance of $500 million to $700 million by year-end 2024, even amid significant manufacturing expansions.
CEO Mark Widmar stated, "As we approach the end of 2024, we remain pleased with the progress made across our business, navigating against a backdrop of industry volatility and political uncertainty."
However, First Solar Management has cut its Q4 earnings guidance due to missed expectations. The company now forecasts 2024 revenue between $4.1 billion and $4.25 billion, down from the prior $4.44 billion to $4.6 billion estimate. Its earnings per share (EPS) forecast has also been reduced to $13-$13.50, slightly below the previous range of $13-$14.
What Do Analysts Expect for First Solar Stock?
Piper Sandler analysts see First Solar as the sole beneficiary of U.S. anti-dumping tariffs on Southeast Asian solar panel imports. Analyst Kashy Harrison reiterated an "Overweight" rating and raised the price target to $250 from $210, noting, "The duties could benefit First Solar's bookings in 2025 as the Inflation Reduction Act's fate under Republican control becomes clearer, thereby extending the higher-for-longer ASP window."
Overall, analysts believe that FSLR stock currently presents a compelling investment opportunity with significant upside potential. Among 32 analysts, FSLR holds a consensus rating of “Strong Buy,” with a breakdown of 25 “Strong Buy” ratings, 2 “Moderate Buy” ratings, and 7 “Hold” recommendations.
The bullish sentiment is supported by a 12-month mean price target of $277.43, indicating expected upside of more than 50% from current levels.
