Why Should We Pay Attention to First Solar?
First Solar‘s primary revenue sources are thin-film solar module manufacturing, long-term B2B supply contracts, and tax credits (IRA subsidies) via U.S.-based production. Notably, First Solar uses a unique cadmium telluride (CdTe) technology that does not require polysilicon, offering superior efficiency even in extreme conditions like high temperatures and low light.
As of 2024, most of First Solar’s production is conducted in U.S.-based facilities, benefiting from the Inflation Reduction Act (IRA) tax credits, which have improved profitability and margins. With strong technological capabilities and policy advantages, the company maintains an operating margin over 30%, solid financials, and is viewed as a company with high future growth potential.
Technological Competitiveness
First Solar exclusively owns thin-film solar module technology based on cadmium telluride (CdTe), which experiences less performance degradation in harsh environments like dust, high temperature, and low sunlight. It is not dependent on Chinese polysilicon, allowing supply chain risk avoidance and alignment with ESG and regulatory expectations.
In 2024, the Series 7 modules further improved efficiency, and the company adopted a design with over 90% recyclability, leading the industry in sustainability and circular economy practices.
From an Investor’s Perspective
First Solar’s forward-looking clean energy business is gaining attention. With steadily increasing sales and operating profits, it fits well with the philosophy of a value investor like myself. Below, I explain why this company meets my criteria for long-term investment.
1. Is it a business I understand?
Yes. It’s easy to understand—a clean energy alternative to fossil fuels that is already generating real revenue. The business model is not overly complex or opaque.
2. Is it suitable for long-term holding?
Absolutely. The renewable energy industry has a bright future. It can potentially replace polluting fossil fuel-based businesses and thus meets this condition well.
3. Does it have strong competitiveness?
Yes. First Solar possesses technological reliability, benefits from U.S. policy support, has a strong ESG profile, and is insulated from geopolitical risks—giving it a significant competitive edge.
4. Is the management trustworthy?
Yes. Major institutions such as S&P, Morningstar, and CFRA rate the quality of its management highly.
5. No matter how good the company is, I will not buy it at an unreasonable price.
With a PER of 10 and a PBR of 1.7, the current valuation is reasonable. Considering the average PER for global solar companies is 13–18 and PBR is 1.5–3.9, it is not overvalued and suitable for investment.
What We Can Learn from the Financial Statements
| Item | 2022.12.31 | 2023.12.31 | 2024.12.31 |
|---|---|---|---|
| Net Income | -44.17 | 830.78 | 1,292.04 |
| Depreciation/Amortization | 269.72 | 307.99 | 423.50 |
| Deferred Tax | -12.80 | -60.81 | -54.75 |
| Non-Cash Items | -338.03 | 50.97 | 40.33 |
| Cash Taxes Paid | -43.59 | -8.66 | -47.42 |
| Working Capital Change | 998.64 | -526.66 | -483.12 |
| Operating Cash Flow | 873.37 | 602.26 | 1,218.00 |
| Capital Expenditure | -903.60 | -1,386.78 | -1,526.08 |
| Other Investing Activities | -288.97 | 913.98 | -37.23 |
| Investing Cash Flow | -1,192.57 | -472.79 | -1,563.31 |
| Financing Items | -12.09 | -31.13 | -27.79 |
| Stock Issuance | 321.48 | 367.98 | 52.64 |
| Financing Cash Flow | 309.39 | 336.85 | 24.85 |
| Net Cash Change | 37.62 | 471.61 | -326.85 |
Source: Naver Finance – First Solar (FSLR.O)
https://m.stock.naver.com/worldstock/stock/FSLR.O
1. Operating Cash Flow Growth
Operating cash flow surged to $1.2 billion in 2024, driven by net income growth, fixed cost efficiency, and stable long-term contracts—indicating strong core cash generation ability.
2. Ongoing Large-Scale Investments
Capital expenditure expanded by 1.5x from 2023 to 2024, reflecting U.S. factory expansions, Series 7 module mass production, and automation upgrades. Although FCF is temporarily negative, this is typical for growth-stage companies.
3. Financial Stability
With low debt reliance and no dividend payments, capital needs are met through stock issuance and stable financing. The company maintains a sustainable equity-based growth structure.
Conclusion: A Reliable Growth Foundation
Stable core earnings and cash flow
Margin improvement via IRA subsidy benefits
Aggressive investment in U.S.-based capacity
Despite short-term negative free cash flow, the company’s financial structure remains strong—favoring long-term growth.
Thus, First Solar is better suited for value-oriented investors seeking mid-to-long-term revaluation and growth, rather than those focused on short-term dividends.
First Solar (FSLR) Analyst Summary
The overall analyst sentiment toward First Solar (FSLR) is positive, with most institutions maintaining a Buy rating. The average target price suggests significant upside from the current level.
| Category | Details |
|---|---|
| Consensus Rating | Buy |
| Number of Analysts | Approx. 25–34 |
| 12-Month Average Target Price | $235.79 – $278.71 |
| Target Price Range | $209 (Wells Fargo) to $367 (Morgan Stanley) |
| Current Price (as of 2025.04.12) | $125.93 |
Top Brokerage Opinions
- TD Cowen: $275 target price, Buy rating maintained. Cites short-term supply chain risks.
- Jefferies: $230 target price, Buy rating. Concerns about warranty costs and guidance clarity.
- UBS: $360 target price, Buy rating. Emphasizes U.S. policy tailwinds.
- Mizuho: Upgraded to Buy with a target price of $259.
Key Risks for Investors
- Supply Chain Risks: Interconnection delays, transformer shortages, etc.
- Warranty Burden: Long-term warranty liabilities impacting financials.
- Policy Uncertainty: Possible reductions in IRA subsidies under the new administration.
- Technology Strength: CuRe, Series 7 thin-film modules give FSLR an edge.
Sources:
MarketWatch,
Seeking Alpha,
Investing.com
First Solar Investment Outlook: Concerns Under Trump’s Policy Shift
1. Risk of Reduced Government Subsidies
First Solar has benefited from IRA tax credits (up to $0.17/W) by producing domestically in the U.S. However, the Trump administration has hinted at reviewing or potentially cutting these subsidies, which could directly impact profitability.
2. Fossil Fuel-Oriented Energy Policy
On April 8, 2025, President Trump signed an executive order to revive the coal industry, significantly reducing federal support for renewable infrastructure. Suspension of approvals for renewable projects and rollback of regulations may hurt future demand for solar modules.
3. Declining Investor Sentiment
Uncertainty in energy policy increases risk premiums among investors. Even though FSLR appears undervalued, its stock could face further downside. Related sector ETFs and FSLR itself have trended downward since March 2025.
4. Relative Disadvantage to Competitors
While First Solar thrived on domestic production incentives, such benefits may weaken under the Trump administration. In contrast, global competitors that operate without subsidies might gain a relative edge.
This Could Also Be an Opportunity
Markets are hard to predict. However, First Solar is currently trading at a very attractive price of $125. Even if subsidies are reduced, the long-term outlook for the clean energy sector remains bright. From my perspective, this deserves a strong rating. I hope this post encourages you not only to follow my insights, but also to discover undervalued opportunities on your own.
Key Metrics Value Investors Should Know
※ This content is for informational purposes only and does not constitute investment advice. All investment decisions are the sole responsibility of the investor.
