On Thursday, Barclays made an adjustment to its outlook on First Solar (NASDAQ:FSLR) shares, reducing the price target from $236.00 to $204.00 while maintaining an Overweight rating. Trading at $129.63, the stock has declined over 36% in the past six months, though InvestingPro analysis suggests the company is currently undervalued. With a P/E ratio of 10.5 and strong financial health metrics, First Solar maintains robust fundamentals despite recent market pressures. The revision comes as the analyst, Christine Cho, anticipates a likely downward revision in the company's revenue guidance. Cho pointed out that the current revenue guidance of $5.3-$5.8 billion for the fiscal year 2025 includes approximately 1.4 gigawatts (GW) of book and turn business, which was already considered questionable even before the new tariffs referred to as the "Liberation Day" tariffs. According to InvestingPro data, First Solar has demonstrated strong revenue growth of 26.75% over the last twelve months, with analysts forecasting 32% growth for FY2025. Get access to 10 more exclusive InvestingPro Tips and comprehensive financial analysis through the Pro Research Report.
The analysis by Barclays suggests that about 700 megawatts (MW) of First Solar's business in India, along with a similar capacity allocated to the US, may face challenges due to the tariffs. The weak pricing environment in India has led Barclays to exclude the 700 MW of expected deliveries in India from its 2025 projections. Consequently, Barclays has decreased its FY25 revenue estimate to $5.185 billion, which falls below the company's provided guidance range and is a decrease from the initial estimate of approximately $5.3 billion.
Barclays is also waiting to observe the impact of the tariffs on the approximately 700 MW of book and turn business in the US before making further adjustments. Should this US business also be affected, Barclays estimates that First Solar's top-line revenue could be at risk of dropping to around $5 billion. Additionally, the gross profit guidance of $2.45-$2.75 billion, which implies a gross margin of about 47% at the midpoint, is expected to be reduced due to the tariffs. Barclays' new gross profit estimate is approximately $2.3 billion, reflecting a gross margin of around 45%, a decrease from the previous estimate of roughly 48%. Current InvestingPro data shows the company maintaining a healthy gross profit margin of 44.17%, with strong liquidity ratios and minimal debt exposure. The company's next earnings report is scheduled for April 29, which could provide more clarity on these projections.
In other recent news, First Solar's financial and strategic landscape has been the focus of several analyst updates. BofA Securities lowered its price target for First Solar to $215 but maintained a Buy rating, citing the company's strategic advantage due to U.S. manufacturing amidst rising trade barriers and tariffs on Southeast Asian imports. Meanwhile, BMO Capital Markets reiterated an Outperform rating with a $230 target, highlighting First Solar's potential benefits from tariffs on solar imports, despite some margin pressure from its own imports from India, Vietnam, and Malaysia.
Barclays also maintained an Overweight rating with a $236 target, discussing the financial impact of tariffs on First Solar's imports and potential strategies for mitigating these costs. Truist Securities adjusted its price target to $245, down from $285, while sustaining a Buy rating, reflecting optimism about the long-term benefits of the Inflation Reduction Act's domestic content requirements and tax credits. Jefferies slightly increased its price target to $202, maintaining a Buy rating, and noted potential short-term margin pressures but expressed a positive long-term outlook based on anticipated demand growth from data centers starting in 2027.
These updates reflect a mix of cautious optimism and strategic adjustments as First Solar navigates changing trade dynamics and policy uncertainties. The company’s focus on domestic production is seen as a key strength in the current market environment. Investors will be closely monitoring how First Solar adapts to these developments and the potential implications for its financial performance.
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