Analyst Andrew Percoco from Morgan Stanley maintained a Buy rating on First Solar (FSLR – Research Report) and decreased the price target to $238.00 from $297.00.
Andrew Percoco has given his Buy rating due to a combination of factors that suggest potential for significant outperformance despite recent challenges. The recent earnings report showed weaker margins, primarily due to unexpected costs such as discounts on tax credits, warranty charges, and elevated logistics expenses. However, the revenue guidance aligns with expectations, and the valuation appears attractive given the current trading price relative to future earnings projections.
Despite the lower gross margin guidance and higher operating expenses, the valuation of First Solar remains compelling, especially if the Inflation Reduction Act (IRA) incentives remain intact. The stock is trading at a low multiple of its projected 2026 earnings, which suggests room for growth. Furthermore, the stability in warranty expense projections provides reassurance amidst investor concerns, indicating that the market may not fully appreciate the company’s potential for future performance.
In another report released today, Deutsche Bank also maintained a Buy rating on the stock with a $265.00 price target.
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