First Solar Faces Challenges Amidst Market Rally
First Solar, Inc. (FSLR), based in Tempe, Arizona, is known for its innovative solar technology. The company produces PV solar modules using thin film semiconductor technology, which offers an environmentally friendly alternative to traditional crystalline silicon panels. With a market capitalization of $19.5 billion, First Solar operates across the Americas, Europe, and the Indo-Pacific region.
Stock Performance Highlights
In the past year, First Solar has struggled, particularly in 2024. FSLR shares have increased by only 4.9% year-to-date and 21.2% over the last year, lagging behind the S&P 500 Index’s gains of 25.3% in 2024 and 32.9% over the past 52 weeks. Despite this, FSLR has outperformed the First Trust NASDAQ Clean Edge Green Energy Index Fund (QCLN), which has seen a decline of 21.8% this year and 7.9% over the last year.
Disappointing Earnings Report and Market Reaction
After releasing disappointing Q3 earnings on Oct. 29, First Solar’s stock fell by over 1%. The company reported a 10.8% increase in net sales year-over-year, totaling $887.7 million, but this was significantly below Wall Street’s expectations. Additionally, sales declined from Q2 by approximately 12.2%, attributed to lower megawatt sales and an increase in product warranty reserves. Compounding these issues, First Solar’s termination of its contract with Plug Power and lower average selling prices in markets like India led to decreased full-year net sales guidance, revised to $4.1 billion-$4.3 billion from an earlier $4.4 billion-$4.6 billion. This news made investors uneasy.
FSLR’s stock continued to decline, plummeting 10.1% on Nov. 6, influenced by market reactions to President Trump’s support for traditional energy sources, which raised concerns for renewable energy firms.
Future Earnings Expectations
Looking ahead, analysts anticipate that FSLR will report a remarkable 70% year-over-year growth in adjusted EPS, reaching $13.16 for the current fiscal year ending in December. Historically, FSLR has had mixed results with earnings; it surpassed expectations in three of the last four quarters but fell short in one instance. The adjusted EPS for the most recent quarter was $2.91, missing estimates by 6.1%.
Investment Ratings and Price Targets
Currently, FSLR holds a consensus “Strong Buy” rating, with 34 analysts covering the stock. Among them, 26 recommend a “Strong Buy,” one suggests a “Moderate Buy,” and seven advise holding the stock. This outlook is more optimistic compared to a month ago when only 24 analysts rated it as a “Strong Buy.”
On Nov. 13, Barclays PLC (BCS) analyst Christine Cho maintained a “Buy” rating but adjusted the price target to $275. The consensus price target for FSLR stands at $277.77, indicating a potential upside of 52.5% from current levels. The highest target among analysts is $360, suggesting a maximum upside of 97.7%.
On the date of publication, Aditya Sarawgi did not hold (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article are intended solely for informational purposes. For more information, please view the Barchart Disclosure Policy here.
The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
