First Solar cut to Sell at Citi on 'challenging long-term outlook'
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First Solar (NASDAQ:FSLR) -2.7% pre-market Monday after Citi downgraded the stock to Sell from Neutral with a $194 price target, cut from $220, saying solar module supply/demand fundamentals "indicate a challenging long-term outlook for the company and may raise questions around the terminal value of the company's assets."
Global excess supply of polysilicon and PV modules should put downward pressure on module ASPs, limiting First Solar's (FSLR) ability to contract volumes beyond 2026 at attractive prices, according to Citi analyst Vikram Bagri.
U.S. domestic module supply like will exceed demand starting in 2026, and exports may not be a viable option, given module prices outside the U.S. are significantly lower, Bagri said, adding that benefits from the Inflation Reduction Act are fully reflected in First Solar's (FSLR) stock price.
Meanwhile, Bagri said he favors Enphase Energy (ENPH), which should benefit from significantly better than expected demand in California, and expects a strong quarter from Sunrun (RUN) with positive commentary on guidance.
First Solar's (FSLR) "above-average revenue and earnings growth can drive the stock for above-average gains over the long term," David Zanoni writes in an analysis published recently on Seeking Alpha.