It will likely not surprise anyone that tariffs are kind of making things a little weird economically right now. With on again / off again application, uncertain quantities, and impacts that are still up in the air, not being quite sure what kind of effect will be felt overall is hardly unique. Solar stock First Solar (FSLR) saw the worst of that uncertainty, and investors responded harshly, sending First Solar shares plunging nearly 10% in Wednesday afternoon’s trading.
A “significant economic headwind.” That is how CEO Mark Widmar described the impact of the new tariffs, though currently, it is unclear exactly how much of a headwind there will be. First Solar knew that the tariffs might be coming, but the scale of these tariffs were not known just three months ago. With manufacturing plants in India, Vietnam and Malaysia, some of First Solar’s production will be impacted much more harshly than others.
In fact, reports noted, First Solar may have to shut down production in Vietnam and Malaysia altogether, which could be a significant problem for sales. The India operations offer service for both North America and South Asia. But Vietnam and Malaysia are both specifically targeted to the United States. And with this potential monkeywrench thrown into the works, First Solar pared back its full-year forecast accordingly. Revenue dropped from $5.3 billion – $5.8 billion to $4.5 billion – $5.5 billion.
Analysts Step In
Analysts, meanwhile, were also clearly concerned. Mizuho analysts kept their Outperform rating in place, but stepped back the price target ever so slightly, down from $252 per share to just $251. The problem that Mizuho saw is that underutilization costs are on the rise at the Southeast Asia production facilities, like Vietnam and Malaysia.
The region is producing about 0.7 gigawatts less than it did previously, which means an increase of costs at about $40 million, reports note. Mizuho also points out the new range for revenue. The top end of that range is still well within the earlier projected range. Though it may not be there by much, that was enough for Mizuho to be fairly confident.
Is First Solar Stock a Good Buy?
Turning to Wall Street, analysts have a Strong Buy consensus rating on FSLR stock based on 21 Buys, three Holds and one Sell assigned in the past three months, as indicated by the graphic below. After a 30.28% loss in its share price over the past year, the average FSLR price target of $218.41 per share implies 74.27% upside potential.
