First Solar Q4 Earnings Preview: A Pivotal Report for the Solar Sector

First Solar (FSLR) is set to report its fourth-quarter earnings on February 25 after market close, with investors keenly watching for signs of stabilization in the solar sector. Analysts expect earnings per share (EPS) of $4.70 on revenue of $1.47 billion, though estimates have been revised downward in recent weeks.

Solar stocks have been under pressure as rising interest rates and political uncertainty in Washington have dampened sentiment. Shares of $FSLR have fallen nearly 50 percent since June, when the stock traded as high as $306. Now sitting around $150 and resting on its 50-week moving average, the stock's reaction to tonight’s earnings will depend largely on full-year guidance, which tends to be the most critical metric for investors given First Solar’s lumpy revenue recognition.

Q4 Expectations and Lumpy Revenue Trends

First Solar has historically shown volatile revenue swings around earnings due to its project-based revenue recognition model, making quarterly estimates more difficult to predict.

- The consensus revenue estimate of $1.47 billion represents a 27.6 percent year-over-year increase but comes with caution, as First Solar has missed revenue expectations six times in the past two years.

- EPS estimates range between $4.17 and $5.25, reflecting uncertainty around project completions and module shipments.

- The full-year EPS consensus sits at $13.15, while full-year revenue is projected at $4.19 billion.

Political and Economic Headwinds

Investor sentiment toward solar stocks has been negative in recent months, driven by concerns about rising interest rates and potential policy shifts under a Republican administration.

One of the key policy concerns is the fate of the 45X manufacturing tax credits, which have been a significant tailwind for U.S. solar manufacturers. Mizuho recently upgraded $FSLR to outperform, arguing that even in a worst-case scenario where the 45X tax credit expires after 2026, tariffs and strong demand will offset potential losses. Mizuho raised its price target to $259 from $218, citing First Solar’s strong moat against crystalline silicon competitors.

Key Drivers and Risks

First Solar’s growth remains tied to several key industry trends and company-specific factors.

1. Volume growth and full-year guidance will be a major focus, with analysts expecting 2025 volume guidance of 17.0 to 17.4 gigawatts, slightly below the current street estimate of 18.6 gigawatts.

2. Booking momentum remains a concern, as analysts do not expect significant changes in demand trends until early reconciliation discussions take place. However, major solar expansions from Google and Intersect Power provide a positive backdrop.

3. Pricing and margins will be closely monitored, as First Solar has benefited from higher average selling prices relative to Chinese competitors. However, long-term pricing pressure remains a potential concern beyond 2026.

4. Potential near-term risks include warranty liabilities on the Series 7 panels, India and U.S. volume blending, and forced shipments to warehouses. While these issues could weigh on results, analysts believe they are short-term factors that may present a buy-the-dip opportunity.

How First Solar Compares to Peers

The renewable energy sector has seen mixed fourth-quarter results, making First Solar’s report even more critical for gauging industry trends.

- American Superconductor posted a 56 percent year-over-year revenue jump, exceeding analyst expectations by 8.4 percent and trading up 33.9 percent after earnings.

- Nextracker saw a 4.4 percent revenue decline but still beat estimates by 3.6 percent, with shares rallying 24.3 percent post-earnings.

These results suggest that low expectations across the solar space could set the stage for an upside surprise, similar to what was seen in Enphase Energy’s fourth-quarter report.

Price Action and Market Expectations

Shares of FSLR have been cut in half since June, with the stock struggling to hold its 50-week moving average around $150.

- Short interest sits at 5.65 percent, indicating some bearish positioning ahead of the report.

- The options market is pricing in a 7.4 percent post-earnings move, suggesting high volatility is expected.

- The average analyst price target stands at $269, implying significant upside if guidance is stronger than feared.

Conclusion: A High-Stakes Earnings Report

First Solar’s fourth-quarter earnings will be a pivotal moment for both the company and the broader solar industry. The full-year guidance for 2025 will be the key driver for stock reaction, as investors look for clarity on volume growth, booking trends, and pricing stability.

If First Solar beats expectations or provides reassuring guidance, the stock could rally sharply, similar to peers like Enphase and Nextracker. However, if guidance disappoints or political concerns remain front and center, shares could break below the $150 support level and trigger additional downside.

With solar stocks trading at historically low valuations, any signs of optimism could be enough to spark a recovery, making tonight’s report one of the most important in the sector this quarter.