Last Update03 Oct 25Fair value Increased 1.80%
Analysts have raised their price target for First Solar, increasing it by nearly $4 to $224. Improved bookings, favorable policy developments, and potential market share gains support a more optimistic outlook for the company.
Analyst Commentary
Recent Street research signals that sentiment toward First Solar has become more constructive, with analysts revising price targets upward and highlighting several growth catalysts. However, experts also acknowledge ongoing uncertainties that could impact the company's long-term outlook.
Bullish Takeaways- Bullish analysts point to a favorable policy environment, including clarifications to the Inflation Reduction Act and the continuation of key tax credits, as major drivers supporting long-term demand and valuation.
- Several price target increases reflect confidence in First Solar's recent strong quarterly results, with both revenue and earnings surpassing expectations. This underpins perceptions of robust operational execution.
- Policy developments such as the passage of major legislative bills and new trade rulings are seen as competitive tailwinds. These may enable First Solar to capture market share as developers reevaluate solar panel sourcing.
- The company is expected to benefit as regulatory enforcement leads to increased tariffs on certain imports. This may prompt potential customers to pivot to domestically produced modules such as those supplied by First Solar.
- Bearish analysts continue to seek greater clarity on First Solar’s long-term margin recovery, noting ongoing uncertainties related to tariff impacts and supply chain dynamics.
- Some risks remain tied to possible trade policy shifts, specifically regarding tariffs and antidumping duties, which could affect cost structures and customer demand if not adequately managed.
- Despite optimism around policy support, there are questions about the company’s ability to sustain recent financial momentum as regulatory and market conditions evolve over the next several years.
What's in the News
- The EPA, under the Trump administration, is planning to terminate $7 billion in rooftop solar grants under the Solar for All program. This decision would affect 60 recipients across 49 states (The Washington Post).
- 5N Plus Inc. has expanded its supply agreement with First Solar, significantly increasing the supply of cadmium telluride (CdTe) and introducing cadmium selenide (CdSe) starting in 2026 in support of First Solar's plans to scale U.S. manufacturing capacity.
- First Solar updated its 2025 earnings guidance, raising expected net sales to a range of $4.9 billion to $5.7 billion and narrowing the range for both operating income and earnings per share.
- UbiQD and First Solar have entered a multi-year supply agreement for quantum dot (QD) technology with the goal of integrating advanced nanomaterials into First Solar's thin film panels to enhance innovation in U.S. solar manufacturing.
Valuation Changes
- Consensus Analyst Price Target has risen slightly, increasing from $220.16 to $224.13.
- Discount Rate has risen marginally, moving from 10.17% to 10.27%.
- Revenue Growth projections have increased moderately, from 17.44% to 17.88%.
- Net Profit Margin is nearly unchanged, rising very slightly from 45.73% to 45.74%.
- Future P/E ratio has edged higher, from 9.79x to 9.88x.
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.
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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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