First Solar: Limited Policy Upside, Execution and Margin Risks Justify Hold at Full Valuation

In a report released today, Julien Dumoulin Smith from Jefferies downgraded First Solar to a Hold, with a price target of $260.00.

Julien Dumoulin Smith has given his Hold rating due to a combination of factors that temper the bullish case for First Solar despite its strong share performance. He notes that visibility into 2026 bookings is limited, with prior de-bookings, margin pressure, and questions around the company’s longer-term strategic direction raising uncertainty. Policy catalysts such as S232, IEEPA, and FEOC appear less powerful than investors hoped, as many developers have already adjusted procurement strategies, potential carve-outs for key countries may dilute pricing benefits, and even higher module prices may face resistance from customers. At the same time, international manufacturing remains a weak spot, with underutilization risks, reciprocal tariffs, and the planned relocation of Southeast Asia capacity all adding complexity to the margin outlook.
Furthermore, Smith highlights that while First Solar is set to build a sizable net cash position over the coming years, the timeline for deploying this capital in ways that could significantly boost the stock appears extended, with nearer-term focus likely on completing existing capacity expansions rather than returning large amounts of cash to shareholders. Against this backdrop, the shares already trade at elevated valuation multiples and near multi‑year highs, while Street expectations for international volumes and S232 benefits may prove too optimistic. Given the combination of limited incremental policy upside, execution and margin risks, and a full valuation, he sees little room for further appreciation in the near term and therefore believes a Hold rating is warranted.

Dumoulin Smith covers the Utilities sector, focusing on stocks such as Southern Co, NextEra Energy, and American Electric Power. According to TipRanks, Dumoulin Smith has an average return of 6.6% and a 56.81% success rate on recommended stocks.