On Thursday, Truist Securities maintained a positive outlook on First Solar, Inc. (NASDAQ:FSLR), reiterating a Buy rating with a steady price target of $300.00. The affirmation comes on the heels of First Solar's announcement of a Tax Credits Sale agreement with Visa Inc . (NYSE:NYSE:V), which is not rated by Truist. Under the terms of the agreement, First Solar will sell tax credits worth $645 million to Visa for $616 million, translating to a purchase price of $0.955 for every dollar of transferred tax credits.
The deal also includes an option for First Solar to sell an additional $225 million in tax credits at the same rate. According to InvestingPro data, First Solar maintains a strong financial position with a current ratio of 2.14 and operates with moderate debt levels. The company's stock is currently trading below its Fair Value, suggesting potential upside opportunity.
The total proceeds could reach up to $831 million if First Solar opts to exercise the option to sell the extra credits. This transaction mirrors a similar deal from the previous year with Fiserv (NYSE:FI), where tax credits were sold at $0.96 per dollar. Truist Securities views this strategy of monetizing tax credits as financially beneficial for First Solar, as it enhances the company's liquidity and strengthens its balance sheet.
With revenue growth of 21.77% in the last twelve months and a market capitalization of $21.15 billion, First Solar demonstrates strong market presence. InvestingPro subscribers can access 8 additional key insights and a comprehensive Pro Research Report about First Solar's financial health and growth prospects.
The agreement with Visa is seen as a faster and more certain way for First Solar to capitalize on tax credits compared to the direct pay or transferability options under the Inflation Reduction Act (IRA). With the IRA, companies face potential timing uncertainties regarding processing and payment applications.
Truist's projections indicate that First Solar is expected to generate $1 billion in tax credits in 2024 and $1.6 billion in 2025. The firm anticipates that First Solar will likely monetize its 2025 tax credits through similar agreements. InvestingPro's Financial Health Score of "GREAT" supports this optimistic outlook, with the company showing strong profitability metrics and solid balance sheet management.
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RBC Capital and Citi have upgraded their price targets for Energy Transfer, citing increased estimates and potential for long-term growth. Sunoco LP, a significant entity in energy infrastructure and fuel distribution, unveiled its financial and operational projections for 2025, emphasizing the subjectivity of these forward-looking statements to various risks and uncertainties.
First Solar, a leading company in the renewable energy sector, has been the subject of several significant developments. Analyst firms Roth/MKM and RBC Capital have maintained their Buy and Outperform ratings on First Solar, respectively, with price targets of $280 and $315. Piper Sandler also raised the price target on First Solar to $250, maintaining an Overweight rating.
These ratings follow the U.S. Department of Commerce's preliminary affirmative determinations in the antidumping duty investigations, which could potentially reduce competition from foreign solar product manufacturers. First Solar's strong financial health and market position, coupled with these recent developments, make it a company to watch in the solar energy sector.
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