On Wednesday, UBS has increased its price target for First Solar (NASDAQ:FSLR) shares to $350 from the previous target of $270, while maintaining a Buy rating on the stock. The adjustment reflects a more optimistic valuation multiple based on expected earnings and policy support.
The investment firm's revised price target is predicated on a 22 times multiple applied to the projected earnings per share (EPS) for the second quarter of 2026 to the first quarter of 2027, discounted by one year. Additionally, the target includes a valuation of $94 per share to account for year-end 2024 net cash and tax credits.
The rationale behind this significant price target increase is attributed to the positive effects of tariff policy on the U.S. average selling price (ASP) for First Solar's products.
The analyst from UBS highlighted that the previously used 15 times multiple has been replaced by a 22 times multiple, underscoring the impact of policy on the company's valuation.
First Solar, listed on NASDAQ:FSLR, is expected to benefit from the combination of net cash by the end of 2024 and the discounted value of the tax credits available to the company.
The $94 per share addition to the price target takes into account $6 per share for net cash and $88 per share for the tax credits.
The Buy rating suggests that UBS maintains a positive outlook on First Solar's stock, anticipating that the company will continue to perform well in the market.
The updated price target of $350 reflects a significant potential upside from the firm's previous valuation, with no other changes to the valuation methodology reported.
InvestingPro Insights
As UBS raises its price target for First Solar, a glance at the real-time data from InvestingPro reveals a company in a strong financial position. With a market capitalization of $29.99 billion and a robust revenue growth of 27.28% over the last twelve months as of Q1 2024, First Solar appears poised for continued success. The company's gross profit margin stands at an impressive 43.05%, indicating efficient operations and cost management.
An InvestingPro Tip highlights that First Solar holds more cash than debt on its balance sheet, providing it with financial flexibility and stability. Additionally, analysts anticipate sales growth in the current year, which supports the optimistic outlook presented by UBS. With the stock trading near its 52-week high and a price total return of 38.85% over the past year, investors might see First Solar as an attractive option.
For those considering a deeper analysis, InvestingPro offers additional insights, including 15 more InvestingPro Tips for First Solar. To explore these further, visit https://www.investing.com/pro/FSLR and remember to use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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