Last Update 02 Jun 26

Fair value Decreased 14%

FSLR: Section 232 Trade Outcome Will Cap U.S. Manufacturing Upside Potential

Analysts cut the base case fair value estimate for First Solar to $243.59 from $281.65 as they adjust assumptions for slower revenue growth, a slightly higher discount rate, and a lower future P/E multiple. They are also factoring in recent research highlighting resolved cancellation risks and the launch of the Series 6 CuRe technology.

Analyst Commentary

Recent research on First Solar shows a mix of optimism and caution as analysts recalibrate their models, price targets, and ratings following updated guidance, new technology launches, and shifting assumptions around project risk.

Bullish Takeaways

Bullish analysts point to the resolution of cancellation risk as a key support for valuation, with some raising price targets into the low US$300s as perceived project uncertainty declines.
The launch of the Series 6 CuRe technology at the Perrysburg, Ohio campus is viewed as a meaningful execution milestone that could support the long term earnings power analysts build into their fair value work.
Some bullish analysts maintain positive ratings even while trimming models, indicating they still see upside relative to current prices based on their long term assumptions for margins and capacity utilization.
Where price targets are reaffirmed at Buy, analysts are generally acknowledging recent earnings but still valuing the stock on a premium P/E framework tied to their expectations for the business over time.

Bearish Takeaways

Bearish analysts have lowered price targets in several steps, in some cases by double digit dollar amounts, as they reset earnings and cash flow estimates after recent Q4 results and updated guidance.
The cut to 2026 guidance across revenue, volumes, and EBITDA is described as a meaningful miss versus prior expectations, which feeds into more conservative valuation multiples and forecasts.
Some research shifts ratings down to Hold, reflecting a view that the risk or uncertainty around future execution, including dependence on policy decisions such as the Section 232 polysilicon outcome, tempers the upside case.
Price target reductions from multiple firms suggest a more cautious stance on how much investors may be willing to pay on a forward P/E basis until the company delivers against updated guidance and external risks clear further.

What's in the News

First Solar reported record Q1 2026 revenue of about US$1.04b, a 24% year over year increase, with operating margins at 33.1% and earnings per share of US$3.22. The company also reaffirmed full year 2026 guidance for net sales of US$4.9b to US$5.2b, adjusted EBITDA of US$2.6b to US$2.8b, and module shipments of 17 GW to 18.2 GW (source: Q1 2026 earnings release).
The company highlighted strong Q1 sales growth in India, approximately 96% utilization at U.S. manufacturing facilities, and a contracted backlog of 47.9 GW valued at US$14.4b. It also noted the launch of next generation CuRe technology and plans for a 1 GW perovskite pilot line in 2027 (source: Q1 2026 earnings release).
First Solar shares recently entered a seven day winning streak, gaining about 38% to a new 52 week high. The move was supported by multiple analyst upgrades that cited the Series 6 CuRe launch, resolved cancellation risks, and potential benefits from U.S. Section 232 tariffs (source: recent share price and analyst reports).
A core solar cell patent of First Solar was ruled invalid in China after a challenge by JinkoSolar. The China National Intellectual Property Administration found it did not meet novelty and inventiveness requirements and invalidated 17 claims (source: patent ruling in China).
First Solar and GameChange Solar announced a partnership to deploy domestically manufactured thin film modules in India that comply with ALMM and ALCM rules. The partnership aims to reduce supply chain and compliance risk for utility scale projects that use First Solar modules on GameChange tracker systems (source: company announcement in India).

Valuation Changes

Fair Value: cut from $281.65 to $243.59, a reduction of roughly 14% in the base case estimate.
Discount Rate: raised slightly from 10.65% to 11.03%, implying a higher required return in the model.
Revenue Growth: trimmed from 12.54% to 7.18%, reflecting more conservative assumptions for future sales expansion.
Net Profit Margin: kept essentially unchanged, moving marginally from 46.23% to 46.22% in the updated forecasts.
Future P/E: eased from 12.38x to 11.68x, pointing to a lower valuation multiple applied to projected earnings.

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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 7.2% annually over the next 3 years.
Analysts assume that profit margins will increase from 30.7% today to 46.2% in 3 years time.
Analysts expect earnings to reach $3.1 billion (and earnings per share of $29.52) by about June 2029, up from $1.7 billion today. However, there is a considerable amount of disagreement amongst the analysts with the most bullish expecting $4.2 billion in earnings, and the most bearish expecting $2.4 billion.
In order for the above numbers to justify the price target of the analysts, the company would need to trade at a PE ratio of 11.7x on those 2029 earnings, down from 19.6x today. This future PE is lower than the current PE for the US Semiconductor industry at 66.9x.
Analysts expect the number of shares outstanding to grow by 0.19% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 11.03%, as per the Simply Wall St company report.

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 $243.59 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 $310.0, and the most bearish reporting a price target of just $150.0.
In order for you to agree with the analysts, you'd need to believe that by 2029, revenues will be $6.7 billion, earnings will come to $3.1 billion, and it would be trading on a PE ratio of 11.7x, assuming you use a discount rate of 11.0%.
Given the current share price of $303.0, the analyst price target of $243.59 is 24.4% lower. Despite analysts expecting the underlying business to improve, they seem to believe the market's expectations are too high.
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