BMO is bullish on First Solar (FSLR.US) to $263: Miskilled orders and improved profits under the impact of 232 tariffs are expected to help revaluation

The Zhitong Finance App learned that BMO Capital raised the stock rating of solar panel manufacturer FSLR.US (FSLR.US) from “equal to the market” to “outperforming the market”, and the target price was raised from $237 to $263. This target price has room for about 25% increase compared to the stock's closing price of $210.10 on Thursday.

BMO pointed out that after the introduction of section 232 of the US Trade Expansion Act, Daiichi Solar's stock price fell by about 16%, and the decline was excessive. Analyst Ameet Thakkar said that the current increase in the stock's rating is mainly based on three factors: first, the company's valuation is attractive after the implementation of Clause 232; second, orders are expected to have room to be re-rated for many years to come; and third, the threat posed by the market to Tesla has already been fully priced. In his view, the impact of these three factors will exceed the temporary low profit margin between 2026 and 2027.

Analysts said that the 15% tariff and minimum import price policy under section 232 should stabilize the price of solar modules in the US at 0.43 to 0.44 US dollars per watt for a long time. First Solar's production capacity has actually been sold out until 2028, so the company is still expected to increase the order shipment ratio with a significant increase in the average selling price (ASP) in the next few quarters, although the headwind factors facing profit margins may continue until 2027.

Analysts added that the rating increase reflects the expectation that the pricing environment for solar modules produced in the US will become more and more favorable. This should help Daiichi Solar increase the order-shipment ratio, expand long-term profit margins, and drive a significant increase in profit before interest, tax, depreciation and amortization (EBITDA) after having usable production capacity in 2029.