First Solar Earnings Show ‘Dramatic’ Benefits of Inflation Reduction Act. The Stock Is Shining.


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First Solar stock has more than doubled over the past year.

Gerard Julien/AFP/Getty Images

First Solar’s financial forecasts highlight its status as potentially the biggest beneficiary of the Inflation Reduction Act, one analyst said Wednesday, as the stock surged higher.

First Solar (ticker: FSLR) was the top-performing stock in the S&P 500 on Wednesday, rising 14.8% to $194.28. It was on pace for its largest percent increase since July 2022, when it rose 15.3%, according to Dow Jones Market Data.

First Solar (ticker: FSLR), the manufacturer of solar panels, reported a loss of 7 cents a share, compared with the consensus call for 17 cents among analysts tracked by FactSet, but management’s forecasts were what grabbed Wall Street’s attention.

The company predicted net sales for 2023 of $3.4 billion to $3.6 billion, slightly above expectations for $3.42 billion. It forecast operating income of $745 million to $870 million, while analysts expected $700 million.

That’s partly because the company expects to receive Inflation Reduction Act tax credits of $660 million to $710 million. The IRA, passed by Congress last year, provides large tax benefits for solar manufacturers in a bid to incentivize solar projects. Barron’s picked First Solar as one of the big winners in the rise of U.S. renewables in a November story.

Guggenheim analysts, led by Joseph Osha, reiterated their Buy rating on the stock but lowered their target for the price to $255 from $260. They said the company’s earnings underscored its status as potentially the biggest U.S. beneficiary of the IRA. 

“The focus for investors was not Q4 results but rather the outlook that the company furnished for 2023 and beyond, factoring in the substantial benefits that the IRA is expected to generate for First Solar,” they said.

The impact of tax credits is “dramatic,” they noted, taking First Solar’s overall corporate gross margin to 37% this year and 45% in 2024, compared with 3% last year. As a result, they see annual earnings before interest, taxes, depreciation, and amortization of $3.1 billion by 2025, which is more than the company’s revenue last year.

KeyBanc Capital Markets analysts also reiterated their Buy rating, and $201 price target, but said the company was clearly waiting on guidance regarding the IRA section that deals with eligibility for tax credits before settling on its U.S. expansion plans.

They said the company’s own eligibility was “reasonably assured” but that waiting for clarity on competitors could help First Solar “rightsize” its investment in the U.S. accordingly.

“Given the strong margin momentum, growth trajectory, and remaining IRA-related upside, we believe the shares will react positively,” they said.

Write to Callum Keown at