Goldman Sachs recently upgraded First Solar, Inc. (NASDAQ:FSLR), with analyst Brian Lee raising the price target from $204 to $255 while maintaining a ‘Buy’ rating on the stock. Lee explained that the revised price target reflects a higher P/E multiple applied to their EPS forecasts for the next four quarters. This increase takes into account First Solar’s potential to outperform, particularly due to supportive trade policies and tariff relief. Additionally, the estimate includes approximately $3 per share in net cash.
One of the primary risk factors highlighted by the analyst for First Solar, Inc. (NASDAQ:FSLR) is the possibility of module oversupply and higher-than-expected module costs, as well as trade policy and manufacturing credits.
First Solar experienced a significant jump of nearly 20% on May 13 following a report that House GOP lawmakers had proposed a tax and spending plan that was less detrimental to solar and wind energy companies than initially anticipated. J.P. Morgan analysts noted that the leaked parts of the reconciliation bill appeared favorable for solar, wind, and geothermal players. The definitions of production and investment tax credits were trimmed down, but they are set to remain until 2028 before gradually phasing out by 2032.
Analyst Mark Strouse emphasized that the new tax credits are expected to make up around 60% of First Solar’s earnings over the next two years. Moreover, with new restrictions on foreign competitors, First Solar is poised to benefit from a competitive advantage. The stock has already seen a 34.6% increase in the last 30 days.
While acknowledging the potential of investing in First Solar, some analysts believe that other artificial intelligence (AI) stocks may offer even greater promise for higher returns with limited downside risk. For those seeking alternative investment opportunities in the AI sector, there is a recommendation to explore a “cheapest AI stock” that is projected to have 100x upside potential.
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