First Solar stock price target raised to $275 from $255 at UBS

UBS has raised its price target for First Solar (FSLR) to $275 from $255, while maintaining a Buy rating, driven by a revised valuation methodology. The firm now applies an 18.5x multiple to estimated 2027 EPS and fully incorporates the present value of 45X tax credits ($75/share) and expected net cash ($25/share), notably removing a prior 25% discount on these tax credits due to their maintenance. UBS also indicated that potential earnings uplift from a roughly 3GW per year U.S. finishing factory is not yet factored into this new target, suggesting further upside for FSLR, which currently trades significantly below the revised target and is considered undervalued by InvestingPro analysis.

Analysis

UBS has upgraded its price target for First Solar (FSLR) to $275 from $255, reaffirming a 'Buy' rating and signaling significant potential upside from its current trading price of $183.42. The revised target is derived from a multi-component valuation, applying an 18.5x multiple to the firm's estimated 2027 underlying earnings per share of $10.58. A critical component of this upgrade is the removal of a previous 25% discount on the present value of 45X tax credits, now fully valued at $75 per share, reflecting increased confidence in the durability of these solar manufacturing incentives. The valuation is further supported by an additional $25 per share attributed to expected net cash by the second quarter of 2026. Current fundamentals, including a P/E ratio of 15.7 and projected revenue growth of 25% for fiscal year 2025, underscore the stock's potential undervaluation. Notably, UBS's model does not yet incorporate the potential earnings uplift from a future 3GW per year U.S. finishing factory, suggesting an additional, unquantified catalyst for the stock.

Key Decisions for Investors

• Investors could view the significant gap between the current price and the new $275 target as a strong buying signal, supported by a multi-faceted valuation including earnings, tax credits, and net cash.
• Closely monitor the U.S. regulatory landscape, as the durability of the 45X tax credits is a critical assumption in UBS's revised valuation and a key risk factor.
• Consider the un-priced catalyst of the planned 3GW U.S. finishing factory, as any progress on its development could lead to further upward revisions in earnings estimates and price targets.
• Given the stock's current P/E of 15.7 and projected revenue growth of 25% for FY2025, the shares may be attractively priced relative to their growth prospects.