On Tuesday, Citi upgraded First Solar (NASDAQ:FSLR) stock from Neutral to Buy, with a new price target set at $254, up from the previous $200.
The firm's analyst cited the recent weakness in First Solar's stock due to a combination of factors including concerns over a potential guidance cut in the third quarter of 2024, lower than anticipated Countervailing Duty (CVD) rates, and the increased perceived likelihood of Donald Trump winning the upcoming presidential election.
The analyst noted that these concerns seem to be already reflected in the stock's current pricing. It is estimated that First Solar's stock is factoring in long-term (LT) module prices below $0.26 per watt, which the analyst believes is conservative for any political outcome. Citi is now modeling a long-term module pricing of approximately $0.28 per watt, aligning with current market prices.
According to the analyst, this new pricing model could be on the low end, with potential to rise depending on the final Anti-Dumping/Countervailing Duty (AD/CVD) decisions and the results of the U.S. presidential election. The firm suggests that any contracting volumes for First Solar's modules that exceed the $0.26 per watt threshold would be beneficial for the company's stock price.
Citi's revision of First Solar's price target and stock rating reflects a more optimistic outlook on the company's financial performance. The upgrade comes as the market continues to evaluate the impact of various macroeconomic and political factors on renewable energy companies like First Solar.
In other recent news, First Solar has experienced a series of analyst target price revisions. Roth/MKM maintained a Buy rating but reduced the stock's price target from $320.00 to $280.00, citing potential near-term headwinds. Similarly, Jefferies adjusted the company's stock price target to $266 from $271, while maintaining a Buy rating.
HSBC initiated coverage on First Solar shares with a Buy rating and a price target of $358.00, highlighting the company's growth potential and earnings visibility. BofA Securities also maintained a Buy rating on First Solar, revising their price target to $321.00 due to potential project delays.
First Solar has been expanding its operations with the inauguration of a $1.1 billion solar manufacturing facility in Alabama. The company is expected to benefit from the U.S. Department of Commerce's recent decision to impose preliminary countervailing duties on solar imports from Southeast Asian countries. However, a union strike at the Houston Port could potentially disrupt the company's operations.
In other developments, Verde Clean Fuels, a company where George Burdette previously held the position of head of project finance, announced the appointment of Burdette as its new Chief Financial Officer. This recent appointment, along with the ongoing analyst attention, are key highlights for First Solar. These developments could provide valuable insights for investors considering First Solar in their portfolio.
InvestingPro Insights
Recent InvestingPro data aligns with Citi's upgraded outlook on First Solar (NASDAQ:FSLR). The company's market capitalization stands at $21.01 billion, with a P/E ratio of 17.4, suggesting a reasonable valuation relative to earnings. First Solar's revenue growth of 25.88% over the last twelve months as of Q2 2024 indicates strong market demand for its products, supporting Citi's optimistic view on module pricing.
InvestingPro Tips highlight First Solar's financial strength, noting that the company "holds more cash than debt on its balance sheet" and "liquid assets exceed short-term obligations." This robust financial position could provide a buffer against potential market uncertainties mentioned in the article, such as political outcomes or industry pricing pressures.
Additionally, an InvestingPro Tip points out that analysts anticipate sales growth in the current year, which aligns with Citi's positive outlook on First Solar's future performance. The company's strong profitability is evident from its impressive operating income margin of 33.98% over the last twelve months.
For investors seeking a more comprehensive analysis, InvestingPro offers 7 additional tips for First Solar, providing deeper insights into the company's financial health and market position.
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