First Solar: Buy-Rated with $190 Price Target Despite Emerging Policy Risks

Company Background

First Solar, a leading U.S. solar company based in Tempe, Arizona, was founded by Harold McMaster on November 29, 1984, and went public through an IPO in 2006. The company produces thin-film photovoltaic solar panels, fueled by a unique compound called cadmium telluride. These panels promise to be more energy efficient, scalable, and cheaper than traditional solar panels, which utilize crystalline silicon.

First Solar represents 45% of thin-film solar panels globally.

Introducing the Inflation Reduction Act

On August 16, 2022, the Biden Administration signed the Inflation Reduction Act (IRA) into law, introducing varying tax benefits for companies producing renewable energy. First Solar has benefited significantly from the 45X Tax Credits from the IRA, which allowed them to collect and sell these tax credits for $0.95 on the dollar.

• 2023: Received $659.7 million for tax credits from Fiserv (FI)
• 2024: Received $818.6 million from Visa (V)

2025 guidance:

• $1.65–1.7 billion in tax credits
• Revenues of $5.3–5.8 billion (up to +38% YoY)
• Gross margins between 42% and 52%
• Operating income of $1.9–2.3 billion (up to +64% YoY)

From Backlash to Benefit

The Republican Party has been vocal regarding its opposition to the Inflation Reduction Act since it was signed into law. This uncertainty led investors to flee from First Solar stock, causing a 41% drop since November 5th, 2024, when Trump was elected as the next U.S. President.

Ironically, the Inflation Reduction Act has disproportionately impacted Republican-leaning states, driving project development, job creation, and economic growth.

On January 20th, 2025, President Trump signed an executive order to pause all disbursements of IRA funds, giving federal agencies 90 days to review the law. However, several congressmen have spoken out against cutting the law, including over 20 House Republicans who signed a letter advocating keeping it intact. Republican Andrew Garbarino stated, "We have 20-plus members saying, 'Don't just think you can repeal these things and have our support.'"

Why Keep the Inflation Reduction Act Intact?

According to Forbes, since its inception, the IRA is estimated to have created:

• 750 projects
• 400,000 new jobs
• Over $600 billion in private investments

The risks of cutting the act are significant:

• Approximately 790,000 jobs could disappear by 2030
• A hit to GDP of around $190 billion in 2035
• A sharp $32 billion increase in energy costs over the next 10 years

Moving forward, it is possible to see some restructuring of the Act — particularly benefits geared toward the electric vehicle sector. However, it is unlikely First Solar will see any significant changes to current tax benefits, considering it is a U.S. company creating jobs in a growing energy sector during a period in which the U.S. seeks to increase domestic investment and expand energy capabilities.

Tariff Protections

Some other political concerns are the threat of tariffs on countries such as Canada, Mexico, and many others. Rest assured, most of First Solar's raw materials are sourced from the U.S. — including the glass and steel required for its panel production.

Additionally, the company is also protected from solar panel production coming out of China, as the U.S. has imposed a 50% tariff on Chinese-produced panels, making imports of these solar panels very unlikely to occur and decreasing domestic competition for the company.

A Bright Opportunity Below Fair Value

At $126 per share, the company sells at a significant discount. Based on the above reasoning and the following valuation methods, I am giving First Solar a Buy rating with a price target of $190 per share.

All four valuation methods consistently demonstrate that First Solar is trading well below fair value at current prices.

The combination of strong IRA tailwinds, domestic manufacturing advantages, tariff protections, and robust 2025 guidance makes this a compelling long-term opportunity.