First Solar Soars 23% on IRA Tailwinds Boosting Growth Outlook

• First Solar (FSLR) jumped 23% to $191.35 after Wolfe Research upgraded it to “Outperform” with a $221 price target, citing benefits from the Inflation Reduction Act.
• The stock’s 51% gain over five trading sessions reflects strong momentum, supported by bipartisan backing for the 45X tax credit and First Solar’s solid financial health, with a P/E ratio of 12.7 and EPS of $11.81.
• Risks include potential warranty issues with Series 7 panels, thin-film technology limitations, new U.S. competitors, and challenges from project delays or logistics uncertainties.

First Solar (FSLR) jumped 23% to $191.35 in midday trading on Tuesday, leading the sector as it surged past its 200-day moving average. The rally was driven in part by Wolfe Research’s upgrade, raising FSLR’s rating from “Peer Perform” to “Outperform” and setting a new price target of $221—a reflection of growing confidence in the company’s strong positioning within a favorable legislative and political landscape. The stock’s remarkable 51% gain over the past five trading sessions underscores strong market momentum, driven by First Solar’s role as a key beneficiary of the Inflation Reduction Act (IRA). Wolfe Research highlighted the proposed legislative changes by the House Ways and Means Committee, which shorten the 45X tax credit duration by one year, as a positive development that mitigates investor concerns about the stability of IRA tax credits.

The bipartisan support for the tax bill further strengthens the outlook, signaling that the 45X tax credit is likely insulated from potential repeal, creating a favorable backdrop for First Solar’s growth. A brief analysis reinforces this optimism, highlighting key financial metrics. First Solar holds $630.4 million in total debt, maintaining a debt-to-equity ratio of 0.08, which reflects a solid financial position, particularly in terms of low risk and high stability. The company’s trailing P/E ratio stands at 11.95, while its forward P/E ratio is 8.30, indicating favorable market expectations. Additionally, First Solar reported an EPS of $11.77 over the past 12 months, further strengthening its growth outlook. These metrics suggest First Solar is well-positioned to capitalize on the increasing demand for domestic solar solutions, particularly as U.S. policies prioritize clean energy and reduce reliance on foreign supply chains.

However, Wolfe Research cautioned that several risks could temper First Solar’s trajectory. Potential warranty issues with its Series 7 panels, limitations of thin-film technology compared to competing solar technologies, and the emergence of new U.S. market entrants could pressure average selling prices. Additionally, customer project delays or cancellations and unpredictable logistics and freight costs pose challenges that could disrupt operations. Despite these risks, First Solar’s strategic alignment with U.S. clean energy initiatives and its financial resilience provide a strong foundation for sustained growth. The company’s ability to navigate competitive and operational challenges while leveraging policy tailwinds will be critical to maintaining its upward momentum in the rapidly evolving solar industry.

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