First Solar: IRA Tax Credit 'Intact', Stock Remains My Top Solar Pick

Summary

• The July 7th Trump Executive Order on eliminating IRS tax credits does not include First Solar's Section 45X for now.
• The extended reciprocal tariff deadline into early August renews tariff risks, and I expect potential trade deals could still maintain a higher tariff rate, pressuring margins.
• 2Q FY2025 earnings could face added pressure on gross margin and EPS after Trump raised steel and aluminum tariffs to as much as 50% on June 4th.
• Despite significant downward earnings revisions, the stock's valuation remains cheap, with 10.8x of non-GAAP P/E fwd.
• The company's healthy balance sheet and strong FCF demonstrate its resilience, helping the stock navigate ongoing policy headwinds.

Justin Paget

The Stock Still Looks Cheap

First Solar, Inc. (NASDAQ:FSLR) recently experienced a whipsaw driven by shifting policy decisions on IRA tax credits. The stock initially rallied more than 50% from the April lows and then dropped 25% and subsequently

Analyst’s Disclosure:I/we have a beneficial long position in the shares of FSLR either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.