On Wednesday, Goldman Sachs (NYSE:GS) maintained its Buy rating on First Solar (NASDAQ:FSLR) with a price target of $279.00.
The firm's analyst noted that First Solar's third-quarter results for 2024 fell short of revenue and earnings expectations due to various operational challenges and one-time events. Consequently, the company's management has lowered its full-year 2024 sales forecast by 7% at the midpoint and now expects earnings per share (EPS) to be at the lower end of its initial range.
First Solar's expected volume sold for the year has also been revised downward by approximately 10%, with a new midpoint target of around 14.4 gigawatts (GW). Despite these setbacks, the analyst remains optimistic about First Solar's ability to navigate supply management issues from India and potential delays in customer projects. The firm believes that the company's robust backlog positions it well for future execution.
The note from Goldman Sachs also highlighted that policy uncertainty, likely influenced by election-related discourse, could continue to affect the company in the short term. However, the firm views this uncertainty as a potential tailwind for First Solar going forward. The analyst expressed confidence in the company's long-term prospects, suggesting that the third-quarter challenges are temporary.
Goldman Sachs reiterated its positive stance on First Solar, emphasizing the company's favorable trajectory despite recent headwinds. Further details on the firm's analysis of First Solar's quarterly performance were provided, underscoring the continued endorsement of the stock's outlook.
In other recent news, First Solar has seen a series of significant developments. The company's third-quarter earnings report showed earnings per share at $2.91, falling short of the projected $3.26. Revenue for the quarter also missed estimates due to various disruptions.
In response to these challenges, First Solar is contemplating a production shift from India to the U.S. to enhance margins. Furthermore, the company has accused competitors, including Canadian Solar (NASDAQ:CSIQ) and JA Solar, of patent infringement.
First Solar's third-quarter net profit rose by 16.6%, reaching $313 million, despite a downward revision in its annual sales forecast due to market challenges. Several analysts have adjusted their stance on First Solar's stock, with BofA Securities reducing the price target to $269 while maintaining a buy rating. Similarly, Evercore ISI lowered its price target to $278 from $281, retaining an outperform rating.
The company is also planning significant capacity expansion, aiming to achieve over 14 gigawatts in the U.S. and 25 gigawatts globally by 2026. These are among the recent developments in First Solar's operations and the broader renewable energy sector.
InvestingPro Insights
To complement Goldman Sachs' analysis, recent data from InvestingPro sheds additional light on First Solar's financial position and market performance. Despite the challenges noted in the third quarter, First Solar maintains a strong balance sheet with more cash than debt, a key factor in its ability to navigate short-term operational issues. This is further supported by the company's liquid assets exceeding short-term obligations, providing financial flexibility.
InvestingPro data shows that First Solar's revenue grew by 25.88% over the last twelve months, aligning with the InvestingPro Tip that analysts anticipate sales growth in the current year. This growth trajectory, coupled with a healthy gross profit margin of 45.78%, suggests that the company's core business remains robust despite recent setbacks.
However, investors should note that the stock has underperformed in the short term, with a -19.95% return over the past month. This aligns with the InvestingPro Tip indicating poor stock performance over the last month, likely reflecting the market's reaction to the recent earnings miss and lowered guidance.
For those seeking a more comprehensive analysis, InvestingPro offers 10 additional tips on First Solar, providing deeper insights into the company's financial health and market position.
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