Last Update 11 Jan 26

Fair value Increased 3.70%

FSLR: U.S. Manufacturing Buildout And Section 232 Policies Will Shape Upside

Analysts have nudged their fair value estimate for First Solar higher from about US$271.61 to roughly US$281.65. This reflects updated views on policy driven demand, tariff risks and the company's position as a U.S. focused utility scale supplier within clean energy.

Analyst Commentary

Recent Street research on First Solar reflects a mix of confidence in the company’s positioning within U.S. utility scale solar and caution around policy, tariffs and booking visibility. Price targets span roughly the mid US$250s to just above US$310, with most recent updates clustered above the current internal fair value estimate.

Bullish Takeaways

Bullish analysts highlight First Solar as a preferred name in U.S. clean energy, pointing to its role as a domestic, utility scale manufacturer that aligns with IRA and FEOC policy support and could justify higher valuation multiples in their models.
Several bullish analysts point to potential price upside into 2026 driven by stricter policy, available module volume and safe harbor activity, which they see as supporting revenue visibility and earnings power in their targets.
Some firms see tariff and policy initiatives, including Section 232, as key supports for U.S. based producers, with one research house describing policy tailwinds as a core pillar for a higher target price range.
Plans for a U.S. finishing plant for modules from international production are viewed positively by bullish analysts, who see this as a way to manage tariff and FEOC exposure and support execution on long term contracts.

Bearish Takeaways

Bearish analysts flag limited booking visibility into 2026 and raise questions about how First Solar’s longer term commercial strategy will evolve, which feeds into more restrained valuation assumptions and a Hold stance.
There is concern that the S232 related tailwind could fall short of investor expectations if carve outs, such as those discussed for Germany, dilute pricing benefits or if developers move quickly ahead of duties, limiting realized margin uplift.
One firm points to lowered 2025 guidance midpoint tied to glass supply constraints and a contract termination with BP as signs that execution is not risk free and that near term growth may be more constrained than prior forecasts assumed.
Some research highlights that disruptive policy and trade developments, including potential changes around Section 232 tariffs on other countries, remain a material risk factor that could affect both demand and pricing embedded in current targets.

What's in the News

First Solar inaugurated a fully vertically integrated manufacturing facility in Iberia Parish, Louisiana, a US$1.1b plant of about 2.4 million square feet that currently employs over 700 people and is expected to reach 826 employees, with planned annual nameplate capacity of 3.5 GW as part of a broader U.S. footprint that targets 14 GW in 2026 and 17.7 GW in 2027 (Key Developments).
The company plans to establish a new facility in Gaffney, South Carolina, with about US$330 million of expected spend to onshore final production for Series 6Plus modules, with commercial operations targeted for the second half of 2026 and an expected 3.7 GW contribution to annual nameplate capacity, along with over 600 jobs at an average manufacturing salary of US$74,000 (Key Developments).
Across its U.S. manufacturing and R&D footprint, including plants in Ohio, Alabama, Louisiana and the planned South Carolina facility, First Solar expects to directly employ over 5,500 people in the U.S. by the end of 2026 and to have invested about US$4.5b in domestic manufacturing and R&D infrastructure since 2019 (Key Developments).
First Solar updated 2025 guidance, with net sales now expected in a range of US$4.95b to US$5.20b, operating income in a range of US$1.56b to US$1.68b and earnings per diluted share in a range of US$14.00 to US$15.00 (Key Developments).
The company is supplying solar modules for the Lockhart III and IV solar projects in San Bernardino County, California, adding to its presence in U.S. utility scale projects (Key Developments).

Valuation Changes

The Fair Value Estimate has risen slightly from about US$271.61 to roughly US$281.65.
The Discount Rate is a touch higher, moving from about 10.51% to around 10.65%.
The Revenue Growth assumption is marginally higher, shifting from roughly 12.47% to about 12.54%.
The Net Profit Margin is slightly lower, moving from around 46.34% to about 46.23%.
The future P/E multiple has increased modestly from about 11.89x to roughly 12.38x.

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Key Takeaways

Strengthened U.S. policies and rapid domestic capacity expansion are improving First Solar's competitive position, boosting demand, margins, and revenue visibility.
Innovations in thin-film technology and a large contracted backlog provide technological leadership, pricing power, and stability against market volatility.
Trade and policy risks, shifting industry demand, intense competition, and credit challenges may significantly threaten First Solar's margins, revenue growth, and financial stability.

Catalysts

About First Solar

A solar technology company, provides photovoltaic (PV) solar energy solutions in the United States, France, India, Chile, and internationally.What are the underlying business or industry changes driving this perspective?

Recent U.S. policy changes-specifically, strengthened incentives and tighter restrictions against foreign entities of concern (such as China) under the new reconciliation legislation-are boosting First Solar's competitive moat, supporting robust demand for domestically produced modules, and enabling the company to capture higher long-term contracted pricing, directly improving forward revenue visibility and gross margins.
The company's rapid U.S. manufacturing capacity expansion (including new Alabama and Louisiana facilities coming online) positions it to leverage tax credits, reduce reliance on imports subjected to tariffs, and capture a premium for domestic content, which is expected to lift both revenue growth and operating margins as incremental capacity is utilized over the coming years.
Policy-driven supply chain localization and ongoing trade enforcement (e.g., AD/CVD tariffs, Section 232 investigation) are causing competitors' supply chains to be disrupted or become costlier, increasing customer reliance on First Solar's non-China-based, vertically integrated manufacturing and supporting higher average selling prices and volume commitments-positively impacting revenue and margins.
First Solar continues to innovate in proprietary thin-film technology (CuRe, perovskite development), which has shown performance improvements and positions the company for long-term technological leadership as solar efficiency and durability gain importance, supporting sustained pricing power, margin protection, and upside to future earnings as these technologies are commercialized.
The steadily growing, visibility-rich contracted backlog (currently at $18.5 billion and 64 GW, with price adjusters for tech milestones and tariffs) provides stability against industry volatility; this allows consistent revenue recognition and helps mitigate net margin compression, even amid cyclical and policy-driven swings in global solar markets.

First Solar Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming First Solar's revenue will grow by 17.4% annually over the next 3 years.
Analysts assume that profit margins will increase from 29.0% today to 45.7% in 3 years time.
Analysts expect earnings to reach $3.2 billion (and earnings per share of $29.46) by about September 2028, up from $1.3 billion today. However, there is a considerable amount of disagreement amongst the analysts with the most bullish expecting $3.9 billion in earnings, and the most bearish expecting $2.0 billion.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 9.8x on those 2028 earnings, down from 17.3x today. This future PE is lower than the current PE for the US Semiconductor industry at 33.5x.
Analysts expect the number of shares outstanding to grow by 0.18% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 10.17%, as per the Simply Wall St company report.

First Solar Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

Ongoing global trade policy uncertainty, particularly regarding tariffs on international module imports from Malaysia, Vietnam, and India, poses a risk to First Solar's ability to profitably sell its internationally produced Series 6 modules; inability to recover tariffs from customers could lead to reduced sales volumes, production curtailments, and gross margin compression.
Increasing strategic shift among major European utilities and oil & gas companies away from renewables and back toward fossil fuels may signal plateauing or declining long-term demand for large-scale solar installations, negatively impacting First Solar's future revenue pipeline.
The solar module market remains highly competitive, with continued price pressure and commoditization risk from aggressive Asian manufacturers and the potential for new, higher-efficiency competing technologies (e.g., perovskites, advanced crystalline silicon); this could erode First Solar's gross margins and market share if their technology loses its competitive edge.
First Solar's significant reliance on U.S. policy support-such as manufacturing tax credits, import tariffs, and domestic content requirements-creates exposure to potential shifts or reductions in government incentives or unfavorable changes when current legislation or executive orders are reinterpreted or expire, potentially impacting both revenue and operating income.
Elevated accounts receivable (including overdue customer default payments and unresolved contract terminations), combined with potential litigation/arbitration to recover funds, increases credit risk and may impact free cash flow and earnings stability if recoveries are delayed or unsuccessful.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of $220.159 for First Solar based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $287.0, and the most bearish reporting a price target of just $100.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $7.0 billion, earnings will come to $3.2 billion, and it would be trading on a PE ratio of 9.8x, assuming you use a discount rate of 10.2%.
Given the current share price of $203.06, the analyst price target of $220.16 is 7.8% higher. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

FSLR: Domestic Manufacturing Expansion And Policy Tailwinds Will Offset Sector Risks