FSLR: Elevated Pricing Power Will Face Policy And Tariff Headwinds

We are lifting our First Solar fair value estimate to $199 from $142, reflecting analysts' broad price target increases into the mid $200s to $300 range, as they highlight the company's structurally advantaged U.S. manufacturing footprint, durable pricing power, and policy driven tailwinds, despite near term supply and tariff headwinds.

Analyst Commentary

Recent Street research reflects a broadly constructive stance on First Solar, with multiple firms lifting price targets into the mid $200s and even approaching $300. These upward revisions generally cite the company’s advantaged U.S. manufacturing base, policy support, and pricing power, even as management navigates glass supply constraints, contract terminations, and evolving tariff regimes.

Several firms emphasize that, despite a mixed Q3 print and modestly lowered 2025 guidance, the medium term margin and pricing opportunity into 2026 remains attractive. Analysts highlight policy driven catalysts, including Section 232 outcomes and Inflation Reduction Act incentives, as well as planned U.S. finishing capacity that could reduce tariff and FEOC exposure. Near term events such as updated guidance, bookings momentum, and clarity on finishing lines are seen as potential triggers for further share price upside.

Bearish Takeaways

• Bearish analysts point to Q3 results coming in broadly in line with consensus but below more optimistic internal models, which reinforces concerns that execution needs to consistently outpace expectations to justify premium valuation multiples.
• There is caution around fiscal 2025 guidance risk, particularly tied to additional India related tariffs and glass supply constraints, which could compress margins and slow earnings growth if not fully offset by pricing and mix.
• Some see limited near term upside as higher for longer interest rates, tariff uncertainty, and shifting power procurement preferences weigh on utility scale project economics and temper growth assumptions despite strong long term demand signals.
• Questions remain over the pace and profitability of capacity expansions and finishing investments in the U.S. Bearish analysts warn that cost overruns, delays, or weaker than expected bookings could challenge current price targets and valuation support.

What's in the News

• White House reportedly considering canceling an additional $12 billion in clean energy funding, a move that could pressure project pipelines and policy support for solar developers including First Solar (Semafor)
• First Solar inaugurated a $1.1 billion, fully vertically integrated manufacturing facility in Iberia Parish, Louisiana, adding 3.5 GW of annual nameplate capacity and expanding its U.S. footprint toward 17.7 GW by 2027
• The company announced a new $330 million facility in Gaffney, South Carolina, to onshore final production for Series 6Plus modules, adding 3.7 GW of compliant capacity and over 600 new jobs, while supporting U.S. energy dominance and FEOC aligned supply
• First Solar modestly narrowed and lowered its 2025 guidance ranges, trimming the top end of expected net sales and earnings per share while still targeting $4.95 billion to $5.20 billion in revenue and $14.00 to $15.00 in EPS
• First Solar is supplying solar modules for the Lockhart III and IV projects in San Bernardino County, California, reinforcing its position in large scale U.S. utility deployments

Valuation Changes

• Fair Value Estimate has risen significantly, increasing from approximately $142.17 to $199.30 per share.
• Discount Rate has risen slightly, from about 10.17 percent to 10.52 percent, reflecting a modestly higher required return.
• Revenue Growth has fallen moderately, with the long term assumption reduced from roughly 13.20 percent to 11.43 percent annually.
• Net Profit Margin has risen modestly, moving from about 37.22 percent to 40.53 percent, implying stronger long term profitability.
• Future P/E multiple has risen moderately, from 8.67x to 10.26x, indicating a higher valuation applied to projected earnings.