Last Update17 Oct 25Fair value Increased 6.45%
First Solar's analyst price target has been raised from $224 to approximately $239. This reflects analyst confidence in the company's U.S. manufacturing expansion, favorable policy developments, and consistent bookings momentum despite near-term industry headwinds.
Analyst Commentary
Recent Street research on First Solar reflects a dynamic mix of optimism surrounding company fundamentals and caution related to broader industry and policy risks. The perspectives below capture both the bullish and bearish takeaways from the latest analyst notes.
Bullish Takeaways- Several bullish analysts have meaningfully raised their price targets for First Solar, citing the company's robust U.S.-based manufacturing presence and strong Q3 bookings as key reasons for positive valuation adjustments.
- First Solar is seen as well positioned to benefit from policy developments, such as the anticipated impact of new antidumping and countervailing duties as well as increased clarity on tariffs. These factors are contributing to ongoing market share gains during periods of policy uncertainty.
- Analysts highlight the firm's long-term cash flow visibility, diversified end markets, and extensive contracted backlog. Together, these support higher price targets and reinforce confidence in the company's growth trajectory through industry cycles.
- With capacity expansions nearing completion and the company being oversold through 2026, investors see an attractive setup for margin recovery and a competitive advantage compared to peers facing supply chain and tariff-related headwinds.
- Some bearish analysts caution that the near-term upside for First Solar shares is limited, citing persistent headwinds from higher-for-longer interest rates and potential risks stemming from additional tariffs on imports from markets like India.
- There remain concerns about clarity on margin recovery and the full impact of ongoing tariff and trade policy changes, which may influence the pace of earnings growth and valuation expansion.
- Shifting power preferences among large-scale purchasers, along with the evolving demand landscape in the utility and residential solar segments, may temper growth expectations until there is more certainty on broader market trends.
- Although the company maintains a strong position, some analysts note that tailwinds from recent policy changes and legislation may already be reflected in current share prices, potentially limiting short-term appreciation.
What's in the News
- The White House is considering canceling an additional $12 billion in funding for clean energy projects, escalating its actions against the sector and potentially impacting major solar companies such as First Solar. (Semafor)
- The Environmental Protection Agency plans to terminate $7 billion in rooftop solar grants awarded through the Solar for All program, an initiative that covers 49 U.S. states. (The Washington Post)
- 5N Plus has expanded its supply agreement with First Solar, committing to increase production and delivery of key semiconductor materials. This supports First Solar's ramp-up in U.S. manufacturing and future capacity growth. (Company Announcement)
- First Solar raised its 2025 earnings guidance for net sales and earnings per share, signaling confidence in business momentum despite industry headwinds. (Company Guidance Update)
Valuation Changes
- Consensus Analyst Price Target has risen from $224 to approximately $239, reflecting a modest increase in estimated fair value.
- Discount Rate has decreased slightly from 10.27% to 10.22%, which indicates a marginally lower perceived risk or return hurdle.
- Revenue Growth expectations have dipped slightly from 17.88% to 17.66% annualized, suggesting a minor reduction in projected top-line expansion.
- Net Profit Margin forecast has edged down from 45.74% to 45.17%, which points to a small decrease in anticipated profitability.
- Future P/E ratio has increased from 9.88x to 10.70x, reflecting higher valuation multiples on expected future earnings.
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.
- 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.
How well do narratives help inform your perspective?
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.
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