On Monday, Piper Sandler updated its outlook on First Solar (NASDAQ:FSLR), raising the price target to $250 from the previous $210 while maintaining an Overweight rating on the stock.
Currently trading at $207.87, InvestingPro analysis suggests the stock is undervalued, with strong financial health metrics supporting potential upside. The adjustment follows the Department of Commerce's (DoC) recent preliminary decision (PD) regarding antidumping duties on solar panel imports from certain Southeast Asian countries, which account for over 70% of U.S. panel imports.
The analyst from Piper Sandler noted that the antidumping rates were higher than initially expected, especially for Vietnam and Thailand, where most suppliers could see these rates applied retroactively 90 days prior to the PD's publication in the Federal Registrar. This could occur as early as this week. For Malaysia and Cambodia, the rates will be effective upon posting to the Federal Registrar.
First Solar is poised to benefit from these developments, as competitor pricing, particularly from c-Si Tier-1 suppliers like Jinko Vietnam, will become significantly more expensive due to cash deposit rates exceeding 50%. With a healthy gross profit margin of 46.5% and revenue growth of 21.8% in the last twelve months, the company appears well-positioned to capitalize on market opportunities.
The duties are likely to positively impact First Solar's bookings, both in volume and price, for 2025. InvestingPro subscribers can access detailed financial analysis and 8 additional key insights about First Solar's market position. This is partly because the fate of the Inflation Reduction Act (IRA) under Republican control is becoming clearer, potentially extending the period of higher average selling prices (ASPs).
Additionally, if project delays occur in 2025, First Solar may have the opportunity to redirect volumes intended for India to the U.S. market. Operating with a strong current ratio of 2.14 and moderate debt levels, the company maintains financial flexibility to adapt to market changes. This scenario would further enhance the company's position in the domestic market, as the new duties on imports make First Solar's offerings more competitive.
For comprehensive analysis of First Solar's competitive position and future prospects, access the full Pro Research Report available on InvestingPro.
In other recent news, First Solar, Inc. has disclosed its Q3 2024 financial results, revealing record production levels and a significant backlog of orders, despite operational challenges and market competition.
The company's earnings per share stood robust at $2.91, despite a $50 million warranty charge for Series 7 products. However, due to operational challenges and market conditions, First Solar revised its net sales projections for 2024 to $4.1 billion to $4.25 billion, down from previous estimates.
The RBC Capital's analysis suggests that First Solar stands to benefit from a more favorable manufacturing landscape in the U.S. due to recent regulatory changes. Following the U.S. Department of Commerce's preliminary findings on the dumping of solar products from Southeast Asian countries, the firm maintains its Outperform rating on First Solar.
These are recent developments surrounding First Solar, which has demonstrated strong growth potential with revenue increasing 21.77% over the last twelve months. The company's total backlog reached 73.3 gigawatts, with contracts extending through 2030, and a new $1.1 billion manufacturing facility in Alabama is set to contribute to the U.S. capacity goal of 14 gigawatts by 2026. First Solar also emphasized its commitment to protecting its intellectual property rights, with recent victories against alleged infringements in China.
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