First Solar: A Strong Business at a Fair Price?

First Solar's core investment case is built on a simple, powerful idea: it's a U.S. factory in a world where trade policy is turning protectionist. While foreign competitors face a rising wall of tariffs on their imported panels, First Solar's vertically integrated manufacturing and its thin-film technology create a durable, policy-insulated growth engine. Think of it like this: if other solar companies are shipping finished goods across oceans, First Solar is building its own factory right here at home. That domestic supply chain is its moat.

The company is actively expanding that moat. It just commissioned a new U.S. production facility and plans to add another 3.7 GW of annual capacity soon. CEO Mark Widmar has made it clear this shift is strategic, positioning the company to benefit directly from trade friction. As he noted, while policy introduces challenges for many, First Solar's setup offers pricing and delivery certainty that foreign rivals simply can't match when tariffs loom.

That certainty is translating into strong demand. First Solar's order backlog is a staggering 54.5 GW through 2030, with the vast majority of its 68.2 GW of total North American booking opportunities coming from the U.S. market. This isn't just a pipeline; it's a multi-year revenue contract. The company's market cap of $25.55 billion reflects its dominant position in this domestic play.

Yet, the stock has faced recent pressure, down 13.8% over the past three months. This pullback, however, may be a buying opportunity for those who see past the noise. The fundamental business advantage-being a U.S. manufacturer with a proven technology and a massive backlog-remains intact. The trade storm is a headwind for some, but for First Solar, it's a tailwind.

The Financial Reality: Growth, Investment, and Valuation

First Solar is a company in the middle of a major build-out, and its financials reflect that. The company is investing heavily to expand its domestic capacity, with projected capital expenditures for 2025 ranging between $0.9 billion and $1.2 billion. This isn't just routine upkeep; it's the cost of building new factories and lines to meet soaring demand. A key part of this plan is a new U.S. production facility with 3.7 GW of annual capacity, slated to come online late next year. In other words, First Solar is spending cash today to secure its growth story for the next decade.

That investment is already paying off in the order book. The company's 54.5 GW of total bookings backlog through 2030 provides a clear view of future revenue, giving management the confidence to commit to this expansion. Yet, the stock's recent performance tells a different story. Year-to-date, the shares are down 16.3%, underperforming the broader market. This pullback suggests investors are weighing the company's strong growth prospects against near-term headwinds-like the very trade policy that benefits First Solar, or the costs of this massive build-out.

Valuation is where the debate gets interesting. The stock trades at an enterprise value to EBITDA multiple of 14.6. That's a premium to the broader market, which means the price already includes a hefty bet on future growth. It's a fair multiple for a company with First Solar's backlog and strategic positioning, but it leaves little room for error. If execution falters or growth slows, that premium could compress quickly.

The bottom line is that First Solar is a business investing for the long term, and its financials show a company with a clear path to scaling. The valuation, however, prices in that success. For the stock to work, the company must not only hit its production targets but also convert that massive backlog into consistent profits without a major stumble. The financial reality is one of high growth, high investment, and a valuation that demands flawless execution.

Analyst Sentiment: A Wide Range of Opinions

The analyst community is split, and the range of opinions is wide. On one end, you have a "neutral" rating with a $150 price target from Rothschild & Co Redburn, a figure that implies the stock is fairly valued given its risks. On the other, there's a bullish "overweight" call with a $285 target from Wells Fargo. The consensus average sits at $275.94, but that single number masks a significant debate. This spread shows deep uncertainty about how First Solar's growth story will unfold, particularly in the near term.

The core of this disagreement hinges on two key factors: the risk of new trade policy and the execution of its expansion plan. A major headwind on the horizon is the potential for new Section 232 tariffs on imported polysilicon. While this could disrupt the broader solar industry by raising costs for foreign competitors, it's a double-edged sword. For First Solar, it could be a tailwind, reinforcing the value of its domestic supply chain. Yet, the mere threat of such tariffs adds volatility and regulatory uncertainty that analysts must weigh.

The primary catalyst for the stock, however, is execution. Investors need to see the company deliver on its massive build-out. The key near-term milestone is the ramp-up of its next-generation CuRe modules in early 2026, alongside the successful commissioning of its new 3.7 GW U.S. production facility. If these come on schedule, it validates the heavy capital investment and keeps the growth trajectory on track. Any delay or cost overrun here would directly challenge the premium valuation and likely pressure the stock.

In short, the analyst debate boils down to a bet on management's ability to navigate policy risks while flawlessly executing a complex, multi-year expansion. The wide price targets reflect that uncertainty. For investors, the path forward isn't about choosing a single analyst view, but watching for clear signs of progress on those two fronts: the successful launch of new technology and the steady build-out of domestic capacity.

The Risks: Disputes and Pipeline Churn

Beyond the broad policy tailwinds, First Solar faces specific, concrete risks that could derail its investment thesis. The most immediate is a pending legal dispute that creates a tangible cash drain and management distraction. The company is enforcing its contractual rights against European developer Lightsource BP, which terminated a 6.6-GW supply agreement last year. First Solar booked $61 million in revenue from that deal but is now seeking an additional $324 million in damages. While the case is ongoing and the resolution date is unclear, this dispute represents a direct hit to potential profits and a significant use of legal resources at a time when the company is focused on a major build-out.

More broadly, there's a risk that the company's massive backlog may not translate into smooth, predictable revenue. Analysts have flagged concerns about "pipeline churn," meaning the company could struggle to convert its 54.5 GW of bookings into consistent sales. The Lightsource BP cancellation accounted for the bulk of recent volume losses, and a William Blair analyst noted that more cancellations could be on the way. This churn reflects a broader hesitation in the corporate energy transition, which could push First Solar to recalibrate its expectations for demand from key sectors. In other words, a large order book is only valuable if those orders actually materialize.

The bottom line is that First Solar's growth story is not without friction. The legal fight over $324 million is a concrete financial risk, while the potential for order cancellations highlights the volatility beneath the impressive backlog numbers. For the stock to hold its ground, the company must not only win its legal case but also demonstrate that it can convert its pipeline into firm, long-term contracts without significant churn. These are the specific hurdles that will test the strength of its domestic advantage.

The Clear Takeaway: A Patient Wait for a Better Price

The investment case for First Solar is built on a solid foundation. Its domestic factory is a real asset in a trade-protected market, and the company's massive backlog provides a multi-year revenue contract. CEO Mark Widmar's strategy of reshoring production is paying off, offering customers the pricing and delivery certainty that foreign rivals lack. In a world of policy uncertainty, that domestic moat is a durable advantage.

Yet, the stock's current price leaves no room for error. The shares are down 16.3% year-to-date, trading at a valuation that already prices in a flawless execution of its expansion plan. The enterprise value to EBITDA multiple of 14.6 is a premium, demanding that every new factory line comes online on schedule and every gigawatt in the backlog converts to profit.

Two tangible risks could pressure that premium further. First, there's the pending legal dispute with Lightsource BP, where First Solar seeks $324 million in damages after the termination of a major supply deal. That's a direct financial hit and a management distraction. Second, there's the risk of pipeline churn, where large orders may not materialize as expected, as noted by analysts. The company has already seen cancellations, and more could be on the way.

The common-sense move here is patience. The business advantage is clear, but the stock is not cheap. The better entry point might be after the company demonstrates it can navigate these specific hurdles-the successful launch of its new technology and the steady build-out of capacity-without a stumble. Until then, the valuation leaves little margin for the kind of execution risks that are inherent in a major industrial expansion. For now, the setup calls for a watchful wait.