First Solar's Resilience Amid Tariff Challenges: A Strategic Rebound Opportunity

The solar energy sector is at a crossroads. While global demand for clean energy surges, U.S. manufacturers face headwinds from protectionist trade policies and supply chain disruptions. First Solar (FSLR) has emerged as a paradoxical case study: a company simultaneously grappling with near-term setbacks and positioning itself for long-term dominance. Let's dissect why this leader in solar module manufacturing presents a compelling contrarian buy opportunity at current prices.

The Tariff Crossroads: Pain Now, Advantage Later

The U.S. government's reciprocal tariffs on solar equipment imports from India, Malaysia, and Vietnam have delivered a double blow to First Solar. These measures, intended to shield domestic manufacturers, have disrupted global supply chains and reduced demand for First Solar's modules in key markets. The company's Q1 2025 results reflect this strain: diluted EPS fell to $1.95 (below guidance), revenue dropped to $0.8 billion (a $0.7 billion quarterly decline), and international sales diluted margins.

But this pain isn't permanent. The tariffs have forced First Solar to accelerate its U.S. manufacturing pivot. By 2026, its vertically integrated facilities in Ohio, Alabama, and Louisiana will reach 25 GW of annual capacity—a critical threshold to capitalize on the Inflation Reduction Act (IRA). The IRA's tax credits, which favor domestically produced solar panels, now give First Solar a ~15% cost advantage over foreign competitors. This structural shift is why Zacks' long-term earnings growth forecast remains robust at 34.5%, far exceeding the solar industry's average of 23.1%.

Jefferies' Bullish Case: Policy Winds in First Solar's Favor

Jefferies' recent upgrade to Buy with a $192 price target highlights a key inflection point. The Senate's proposed IRA amendments—which would phase out tax credits for companies using Chinese-sourced materials—are a gift to First Solar. As the sole U.S. manufacturer with 52 GW of its 66 GW backlog tied to domestically produced modules, it stands to capture disproportionate market share. Analyst Julien Dumoulin Smith notes that solar module prices could rise to $0.32–$0.33/W for new contracts, enabling First Solar to command premiums while competitors face margin erosion.

This isn't just about tariffs. First Solar's proprietary CdTe thin-film technology and emerging innovations like its CuRe modules (with 22% efficiency gains) create a technological moat. Even its Series 7 module quality issues—a potential $100 million warranty liability—are being addressed through production adjustments, not fundamental design flaws.

Navigating Near-Term Storms for Long-Term Gains

Bearish arguments focus on three risks: 1. Supply chain bottlenecks: China's tellurium export controls threaten CdTe production. First Solar is diversifying suppliers but faces near-term costs. 2. Trade remedy uncertainties: Ongoing AD/CVD tariff cases could disrupt international sales. 3. Short-term EPS pressure: 2025 guidance now projects diluted EPS of $12.50–$17.50, down from earlier expectations.

Yet these risks are priced into the stock. At a 9.26x forward P/E—half the solar industry's average valuation—investors are already discounting worst-case scenarios. Even Zacks' “Strong Sell” rating hinges on near-term earnings misses, not the company's core value proposition.

The Contrarian Play: Buy the Dip, Bet on Solar's Future

First Solar's $299.49 GuruFocus valuation suggests an 81% upside from current levels. While institutional ownership has dipped slightly, the 4.43% increase in shares held by funds signals cautious optimism. The IRA's 2026 deadline creates urgency for U.S. solar projects, and First Solar's 25 GW domestic capacity will be in pole position to meet demand.

Investment thesis: - Buy on dips below $150, aiming for a 12–18-month horizon. - Hold through volatility, as tariff uncertainty resolves and IRA policies lock in First Solar's leadership. - Watch for catalysts: IRA policy finalization, Q3 2025 gross margin expansion, and Series 7 module reliability data.

The market is pricing in short-term pain but ignoring First Solar's structural advantages. For investors willing to look past 2025's headwinds, this is a rare opportunity to buy a solar leader at a 44% discount to its peak—a discount that won't last as the renewable energy boom accelerates.

Final call: First Solar is a “Strong Buy” for patient investors. The road to 2026's 25 GW capacity—and the IRA's full benefits—is bumpy, but the destination is worth the ride.