Solar companies have been boosted by funding for clean-energy initiatives contained in the Inflation Reduction Act.
ANDREW CABALLERO-REYNOLDS/AFP via Getty Images
Solar-panel companies have been a hot investment area this year on the back of legislation for clean energy. However, another analyst has soured on the long-term prospects for First Solar, one of the sector’s most prominent stocks.
A global excess supply of polysilicon and photovoltaic modules is likely to push down prices, limiting
First Solar’s
(ticker: FSLR) ability to contract volumes beyond 2026 at attractive prices, according to analysts at
Citi.
Citi’s analysts downgraded their rating on First Solar to Sell from Neutral and their target price on the stock to $194 from $220.
First Solar shares traded down 2.4% at $211.78 in premarket trading on Monday, having risen 45% this year so far. First Solar didn’t immediately respond to a request for comment from Barron’s.
“We believe First Solar’s long-term outlook for margins and growth will draw increased scrutiny as the global supply of Si-based [silicon-based] modules rises while the cost drops,” the analysts wrote in a research note on Monday.
However, Citi’s analysts said there could be good news for the stocks of solar-inverter maker
Enphase
(ENPH) and solar-power developer
Sunrun
(RUN). They back
Enphase
to report record-high margins and market share gains, while saying
Sunrun
could be set to issue guidance for a 10%-15% annual increase in solar installations.
Citi is following a similar move by
Deutsche Bank
recently, which also downgraded First Solar but struck a positive note on Enphase.
Enphase stock was down 0.3% in premarket trading. Enphase is set to report earnings on Tuesday, followed by First Solar on Thursday.
Write to Adam Clark at [email protected]
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