Investing.com -- Mizuho (NYSE:MFG) Securities lifted its rating on First Solar (NASDAQ:FSLR) stock to Outperform from Neutral, in a move driven by an improved sales outlook post-2026 and a stronger competitive position in the US market.
Citing their channel checks, Mizuho notes that First Solar's hold on TOPCon technology patents gives it an edge over competitors who are relegated to using older and less efficient PERC cells. This technological advantage is expected to grant First Solar greater pricing power.
The investment bank also addressed the concern regarding the potential expiration of the 45X manufacturing tax credits, which are significant for First Solar's earnings.
While acknowledging the possibility of policy changes under a Republican administration, analysts believe that any negative impact on First Solar could be mitigated by tariffs, thus enhancing the company's negotiating power in 2027.
As such, Mizuho analysts have increased their 2027-2032 earnings estimates and raised their discounted cash flow (DCF)-based price target for First Solar by 19% to $259.
The report suggests that the anticipated oversupply of US domestic solar cells may not materialize due to the uncertainty around the Inflation Reduction Act (IRA) subsidies, competitors' reliance on less advanced technology due to First Solar's patents, and sustained demand for renewable energy.
Furthermore, while competitors could develop solar supply chains in regions currently not subject to tariffs, this would “take time and could come under Trump tariffs in the future,” analysts led by Maheep Mandloi noted.
“Expect pricing indicator in bookings after IRA changes,” they added.
Ahead of First Solar's fourth-quarter earnings call, Mizuho highlighted positive trends in backlog and bookings data from renewable project developers and solar trackers.
These trends suggest stable bookings and average selling prices (ASPs) for First Solar, despite uncertainties related to potential policy changes under the Trump administration.
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