The latest U.S. tariffs on imported solar panels could give First Solar, Inc. (NASDAQ:FSLR) a meaningful competitive advantage, according to UBS and BNP Paribas. The new tariffs include a minimum import price of $0.38 a watt and a 15% duty on covered polysilicon imports, increasing the cost burden for competitors relying on imported panels. However, the company is well-positioned to gain from the new policy because its U.S. manufacturing capacity is largely sold out, allowing it to benefit from higher prices as competitors face rising import costs.
Still, there is a bigger concern underlying the bullish case. Both firms are cutting their forecast for solar installations through 2030. That suggests tariffs could strengthen the company's competitive position but also raise costs, potentially weakening overall solar demand.
UBS reiterated its Buy rating and $330 price target on First Solar, while BNP Paribas raised its price target from $281 to $402, citing a structural rise in terminal value. The new tariffs could increase effective panel prices to around $0.44 per watt from roughly $0.38 per watt. Because the company's domestic manufacturing capacity is sold out through 2028, the earnings impact is expected mainly from 2029 onward.
Jon Windham of UBS expects supply constraints and data center power demand to absorb higher costs. The analyst remarked: The market for incremental clean energy generation is in a state of scarcity. Meanwhile, BNP Paribas's Moses Sutton also sees support from inventory, pre-tariff imports, and higher PPA prices.
The outlook for the broader U.S. solar market is weakening, with BNP Paribas cutting its solar installation forecast for 2029 to 55 GW from 65 GW and for 2030 to 43 GW from 55 GW. This represents a meaningful reduction in the addressable market for First Solar, Inc. (NASDAQ:FSLR). BNP's Moses Sutton described the outcome as very bad for the industry but excellent for FSLR.
The analyst acknowledged that the company's gains partly come at the expense of the broader industry. Meanwhile, the investment case also depends on developers passing higher costs through PPA prices. This requires power demand to remain strong across the sector.
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