Citi downgraded First Solar (NASDAQ:FSLR) to Sell from Neutral, cutting its price target on the stock to $194 from $220 in a note to clients on Monday.
Citi analysts told investors in a note that they believe "FSLR's long-term outlook for margins and growth will draw increased scrutiny as the global supply of Si-based modules rises while the cost drops."
The downgrade pushed FSLR's shares more than 5% lower on Monday. It is currently trading around the $205 mark after closing Friday's session at almost $217 per share.
"Solar module supply-demand fundamentals indicate a challenging LT outlook for FSLR and may raise questions around terminal value of the company's assets," wrote the analysts.
In addition, they believe the global excess supply of polysilicon and PV modules should put downward pressure on module ASPs, limiting FSLR's ability to contract volumes beyond 2026 at attractive prices.
"Furthermore, US domestic module supply is likely to exceed demand starting 2026," they added. "Given module prices outside the US are significantly lower, exports may not be a viable option. Finally, we believe IRA benefits are now fully reflected in FSLR."