Free Trial

Is First Solar’s Earnings Drop a Golden Buying Opportunity?

Solar Panels Against The Deep Blue Sky - stock image

Key Points

  • First Solar shares dipped following a lackluster earnings report, including a reduction in forward guidance.
  • Shortly after, shares of solar companies more broadly fell following the U.S. presidential election.
  • First Solar has strong fundamentals, presenting a buying opportunity for investors willing to take on the uncertainty of a new political and regulatory environment.
  • 5 stocks we like better than First Solar.

With a market capitalization of over $23 billion, First Solar Inc. NASDAQ: FSLR is the biggest solar company in the U.S., where it has notched success with its low-cost and easily scalable Cadmium Telluride (CdTe)-based solar panel technology.

First Solar Today

First Solar, Inc. stock logo
FSLRFSLR 90-day performance
First Solar
$206.79 -1.13 (-0.54%)
(As of 02:33 PM ET)
52-Week Range
$135.88
$306.77
P/E Ratio
17.81
Price Target
$280.71

However, in late October 2024, the firm posted disappointing fiscal results for the third quarter, including both top- and bottom-line declines relative to the prior quarter. The drop in net sales to $0.9 billion from $1.0 billion and in earnings per diluted share to $2.91 from $3.25 was accompanied by a reduction in full-year net guidance on net sales, gross margin, net cash balance, and other metrics.

FSLR shares dipped marginally following the earnings release but remain up nearly 47% in the last year. As the Biden administration, which implemented the pro-solar Inflation Reduction Act, prepares to transfer power to the Trump administration in January, investors may question whether First Solar has the fundamentals to thrive, regardless of the regulatory landscape in 2025 and beyond.

Solar Continues to Up Capacity Despite Nuclear Focus

Most recently, energy demand from the booming AI and cloud computing spaces has prompted a shift in focus toward nuclear energy as a top contender in the green energy race. At the same time, the solar industry has been bogged down for multiple quarters with increases in component costs thanks to inflation, suppressed customer demand due to high interest rates, and similar issues.

However, investors should recognize that, despite these headwinds (some of which, including inflation and high rates, have already begun to dissipate), the solar industry is continuing to grow rapidly. In the second quarter, domestic module manufacturing capacity increased by nearly 50% to 31.3 GW. Installations in the U.S. increased 29% year-over-year for the quarter to a record-setting 9.4 GW of capacity. Increases were driven primarily by utility-scale installations as the residential, commercial, and community solar segments declined.

Uncertain Regulatory Environment

Though it remains to be seen how a second Trump presidency will impact the green energy sector, the new administration will likely focus efforts on oil and gas rather than sustainable energy options. The MAC Global Solar Energy Index, a benchmark for the broader solar industry, fell by more than 10% the day after the presidential election.

First Solar MarketRank™ Stock Analysis

Overall MarketRank™
99th Percentile
Analyst Rating
Moderate Buy
Upside/Downside
38.1% Upside
Short Interest Level
Bearish
Dividend Strength
N/A
Environmental Score
-0.14
News Sentiment
0.91mentions of First Solar in the last 14 days
Insider Trading
N/A
Proj. Earnings Growth
53.99%
See Full Analysis

However, analysts suggest that the subsidies for solar energy included in the Inflation Reduction Act may continue into a new presidency, thanks to widespread support in several Republican-led states. There may also be a surge in grant funding related to the Act in the final two months of Biden's presidency, which could give solar stocks like SolarEdge Technologies Inc. NASDAQ: SEDG and Enphase Energy Inc. NASDAQ: ENPH a short-term boost.

It's also possible that other priorities in the Trump administration could negatively impact solar firms, such as prioritizing federal lands and waters for fossil fuel projects over wind or solar alternatives.

Aside from regulatory measures impacting the energy industry, trade and tariffs could also impact First Solar's business. Many solar companies source components from Asia, a practice that has occasionally led to supply chain issues and problems synchronizing with demand. If the Trump administration institutes sweeping tariffs as expected, First Solar may face significant cost increases or be forced to speed up its transition to manufacturing components in the U.S.

Major Upside Potential for FSLR

Despite late-October target price cuts by analysts at Bank of America and Morgan Stanley, analysts are still generally optimistic about First Solar's prospects. Analysts have projected earnings growth of almost 57%, and shares of FSLR still maintain a consensus price target of $281.13, for a potential upside of almost 43% compared to current levels.

First Solar's forward P/E ratio of 14.8 is lower than that of green energy competitors like Enphase and NextEra Energy Inc. NYSE: NEE. Still, in a tumultuous political moment that could have broad implications for the solar industry, investors also have reasons to be cautious before entering a new position in a company like First Solar.

→ Urgent: This election is rigged (From Porter & Company) (Ad)

Should you invest $1,000 in First Solar right now?

Before you consider First Solar, you'll want to hear this.

MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and First Solar wasn't on the list.

While First Solar currently has a "Moderate Buy" rating among analysts, top-rated analysts believe these five stocks are better buys.

View The Five Stocks Here

7 Stocks to Own Before the 2024 Election Cover

Looking to avoid the hassle of mudslinging, volatility, and uncertainty? You'd need to be out of the market, which isn’t viable. So where should investors put their money? Find out with this report.

Get This Free Report
Nathan Reiff
About The Author

Nathan Reiff

Contributing Author

Fundamental analysis, ETFs, Consumer Staples

Like this article? Share it with a colleague.

Companies Mentioned in This Article

CompanyMarketRank™Current PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
First Solar (FSLR)
4.9571 of 5 stars
$206.79-0.5%N/A17.81Moderate Buy$280.71
SolarEdge Technologies (SEDG)
4.6218 of 5 stars
$14.77-7.0%N/A-0.51Reduce$22.04
Enphase Energy (ENPH)
4.5829 of 5 stars
$73.45-2.2%N/A166.93Hold$101.13
First Solar (FSLR)
4.9571 of 5 stars
$206.79-0.5%N/A17.81Moderate Buy$280.71
Compare These Stocks  Add These Stocks to My Watchlist 


Featured Articles and Offers

Recent Videos

Super Micro’s Rebound: Can SMCI Stock Rally Another 100%?
Why Meta Is Still a Top Stock Pick for 2025
Why Amazon’s AI Power and Holiday Boost Make This Stock a 2025 Winner

Stock Lists

All Stock Lists

Investing Tools

Calendars and Tools

Search Headlines