By Avi Salzman

Shares of First Solar were rising Wednesday, after the company projected strong earnings growth in an increasingly complicated market.

The stock was up 11% in afternoon trading. The S&P 500 was up 0.8% and the Nasdaq was up 1.3%.

First Solar's fourth-quarter earnings per share of $3.65 fell below analysts' expectations for $4.70. Revenue of $1.51 billion was above expectations for $1.48 billion. The midpoint of the company's 2025 EPS guidance of $17 to $20 was below analysts' expectations for $19.39 per share. But it still implied annual earnings growth of about 50%.

First Solar -- America's largest solar manufacturer -- detailed a long list of challenges on its earnings call. It is suing Chinese-based competitor JinkoSolar for patent infringement, the company incurred $56 million in warranty charges because of manufacturing issues on one of its product lines, and it pulled sales personnel out of Europe because the market has struggled due to competition from Chinese companies.

Chief Financial Officer Alexander Bradley said the company is dealing with "a challenging full year and quarterly supply/demand allocation and balancing position as we enter 2025."

But some analysts think the stock has already sold off due to those problems, given that it is down 30% in the past six months.

"We see pressure on the stock as overdone and could view the fourth quarter as a clearing event," wrote Jefferies analyst Julien Dumoulin-Smith.

The quarter was "messy," wrote Oppenheimer analyst Colin Rusch, because the company faced challenges in ramping up its U.S. solar factories and policy uncertainty, among other issues. But he still likes the stock because he doesn't expect Congress to fully repeal tax credits for solar, and he thinks First Solar has advantages given its large domestic manufacturing footprint. He thinks shares can approximately double.

Policy uncertainty may be the biggest near-term factor impacting the company. The solar industry is at a turning point, with Republicans in Congress looking to amend or repeal the Inflation Reduction Act, which gives billions worth of subsidies to solar projects. First Solar is among the largest recipients of those benefits.

Write to Avi Salzman at avi.salzman@barrons.com

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February 26, 2025 12:43 ET (17:43 GMT)

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