On Tuesday, BofA Securities announced a revised price target for First Solar (NASDAQ:FSLR), reducing it to $321.00 from the previous $343.00, while continuing to endorse the stock with a Buy rating. The adjustment comes after considering recent industry feedback and data, which indicate that several solar projects expected to be operational in 2024 are now likely to be delayed until 2025.
The delays are reportedly due to difficulties in obtaining essential components such as transformers and high-voltage circuit breakers. The industry is also facing labor shortages and interconnection hold-ups.
Despite these short-term hurdles, BofA Securities holds a positive outlook for First Solar, citing the company's approximately 80 gigawatt backlog that is fully sold out through 2026 and the stability of U.S. pricing as factors that underpin its near-term estimates.
The firm acknowledges that First Solar's recent stock price decline may be linked to the preliminary countervailing duty (CVD) rate determinations, which appear to be lower than expected. However, the firm anticipates these rates to likely increase following a revision. BofA Securities emphasizes that First Solar's competitive edge is significantly supported by the 45 tax credits, reinforcing their Buy rating on the stock.
First Solar's position in the market is seen as unique due to its fully booked backlog and the expectation of U.S. pricing stability, which provides some cushion against the near-term challenges faced by the solar industry. The company's outlook remains robust in the eyes of BofA Securities, despite the need to navigate through the current supply chain and labor constraints.
In other recent news, Verde Clean Fuels has announced the appointment of George Burdette as its new Chief Financial Officer, bringing over 15 years of experience in financial and investment management to the role.
Meanwhile, First Solar is expected to benefit from the U.S. Department of Commerce's decision to impose preliminary countervailing duties on solar imports from Southeast Asian countries, making its domestically manufactured panels more competitively priced. However, the company faces potential disruptions due to a union strike at the Houston Port, as noted by analyst firm KeyBanc, which maintained a Sector Weight rating on First Solar.
In addition, First Solar has been expanding its footprint with the inauguration of a $1.1 billion solar manufacturing facility in Alabama, aiming to reach over 14 GW of annual nameplate capacity in the U.S. by the end of 2026.
On the other hand, Barclays (LON:BARC) analysts have addressed potential risks to First Solar's fiscal year guidance, noting industry delays might push some project completions into next year, despite reaffirming its Overweight rating on First Solar.
InvestingPro Insights
First Solar's financial metrics and market performance align with BofA Securities' positive outlook. According to InvestingPro data, the company has demonstrated strong revenue growth, with a 25.88% increase over the last twelve months as of Q2 2024. This growth supports the firm's confidence in First Solar's robust backlog and market position.
InvestingPro Tips highlight that First Solar holds more cash than debt on its balance sheet and has liquid assets exceeding short-term obligations. These factors contribute to the company's financial stability, potentially enabling it to weather the industry-wide challenges mentioned in the article, such as project delays and supply chain issues.
The stock's performance has been noteworthy, with a 54.56% total return over the past year and a 28.12% return over the last six months. This aligns with BofA Securities' Buy rating, despite the recent price target reduction. For investors seeking more comprehensive analysis, InvestingPro offers 8 additional tips for First Solar, providing deeper insights into the company's financial health and market position.
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