Why First Solar Stock Dimmed by More than 10% Today

Few market players were energetic about First Solar (NASDAQ: FSLR) stock on Wednesday. Following an analyst's recommendation downgrade, they traded out of the solar energy company, and it closed the day down by more than 10%.

A less sunny outlook

The person behind the downgrade was Jefferies prognosticator Julian Dumoulin-Smith. He knocked his First Solar rating down one peg to hold from his previous buy. He also adjusted his price target downward, reducing it to $260 per share from $269.

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According to reports, Dumoulin-Smith doesn't see the company improving its bookings, a key facet of its business. He pointed out that management lowered its guidance several times last year, not least because of debookings (i.e., customer project cancellations).

Additionally, the analyst wrote that following the passage of the U.S. government's Big, Beautiful Bill last year, top-down support for alternative energy solutions is limited.

Solar struggles

The already-struggling solar industry certainly wasn't helped by the bill, although to be fair, the measure didn't entirely remove the advantages alt-energy companies enjoyed.

The recent trend of debookings with First Solar is concerning, and it appears to be a lasting phenomenon, given the reduced government support and widespread consumer concerns about the economy. I'd be cautious about investing in First Solar stock at this time.

Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends First Solar and Jefferies Financial Group. The Motley Fool has a disclosure policy.