Will First Solar Weather the Tariff Headwinds and Shine Again?

First Solar Inc. FSLR, a prominent solar panel manufacturing company in the United States, lowered its full-year 2025 guidance (in its first-quarter earnings announcement), citing the challenges arising out of the recent import tariff imposed by the U.S. administration as the primary reason. The company now expects to generate earnings in the range of $12.50-$17.50 per share, down from its earlier forecast of $17.00-$20.00.

Revenues are projected to be between $4.50 billion and $5.50 billion compared with the previous range of $5.30-$5.80 billion. The company also lowered its expected module shipments to 15.5-19.3 gigawatts (GW).

In particular, Trump’s implementation of double-digit reciprocal tariffs on India, Malaysia and Vietnam poses a significant economic headwind for First Solar’s manufacturing facilities in these countries. These steep duties are expected to reduce U.S.-bound demand from these locations, making it harder to secure new orders and potentially forcing production slowdowns. In the worst-case scenario, sustained pressure could lead to partial shutdowns, thereby hampering the company’s near-term operational performance.

Nevertheless, the long-term growth prospects of the company remain strong, backed by its vertically integrated U.S. manufacturing line, growing demand in the U.S. core solar market wherein FSLR already enjoys an established footprint and a strong domestic supply chain. Together, these factors can be expected to offer First Solar ample cushioning against tariff headwinds while supporting sustained growth over the long run.

The Zacks Consensus Estimate for FSLR’s long-term (three-to-five years) earnings growth rate, pegged at 34.5%, which comes above the industry’s average rate of 23.1%, supports this thesis.

Tariff Challenge Impacting Other Solar Stocks

The U.S. government’s recently increased tariffs on solar equipment imports from China and Southeast Asia have also been putting pressure on other solar stocks like Canadian Solar Inc. CSIQ and JinkoSolar JKS, which have a strong presence in these regions, in the form of reduced demand and sales.

Notably, Canadian Solar has multiple manufacturing facilities across China, along with a few other factories located in Thailand and Vietnam.

On the other hand, JinkoSolar has established factories in Vietnam, while it still relies heavily on its raw materials sourced from China.

FSLR’s Price Performance, Valuation and Estimates

Shares of FSLR have lost 43.9% in the past year compared with the industry’s 45% decline.

The company shares are trading at a discount on a relative basis, with its forward 12-month Price/Earnings being 9.26X compared with its industry’s average of 15.66X.

The Zacks Consensus Estimate for FSLR’s near-term earnings has moved south over the past 60 days.

FSLR stock currently carries a Zacks Rank #5 (Strong Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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