First Solar Shares Rebound As Wall Street Dismisses Tesla Competition Concerns

Mizuho does not expect any meaningful impact on First Solar's earnings through at least 2030 from Tesla’s proposed plan to scale U.S. solar capacity.

• Wells Fargo, meanwhile, sees limited impact to First Solar from Tesla’s plans to scale solar given its cost advantage and pricing power.
• Other U.S. manufacturers including Canadian Solar face more risk, in Wells' view.
• BMO Capital, however, downgraded First Solar to ‘Market Perform’ from ‘Outperform’ with a price target of $263, down from $285, on Thursday.

Shares of First Solar Inc. (FSLR) rose 1% on Friday after Wall Street dismissed concerns about Tesla Inc.’s (TSLA) solar plans impacting the company’s financials.

Mizuho believes First Solar's competition concerns around Tesla (TSLA) are overdone, as per TheFly.

Fully U.S.-made solar modules will be capital intensive, costing more than First Solar's average selling price, the analyst told investors in a research note. In addition, Mizuho says industry feedback consistently indicates that scaling polysilicon and wafer capacity takes three-to-four years.

The analyst estimates that the U.S. does not currently have sufficient metallurgical-grade silicon supply to support Tesla's proposed plan. As such, it does not expect any meaningful impact on First Solar's earnings through at least 2030.

Street Consensus

Wells Fargo, meanwhile, sees limited impact to First Solar from Tesla’s plans to scale solar given its cost advantage and pricing power. Other U.S. manufacturers including Canadian Solar (CSIQ) face more risk, in Wells' view. The firm stays positive on Overweight-rated First Solar and recommends buying on weakness.

BMO Capital, however, isn’t as optimistic as the other two. It downgraded First Solar (FSLR) to ‘Market Perform’ from ‘Outperform’ with a price target of $263, down from $285, on Thursday in light of the competition from Tesla.

The firm "initially dismissed as aspirational" Tesla CEO Elon Musk's older remarks about potentially building a significant vertically integrated solar photovoltaic modules manufacturing base to self-generate.

However, Musk's remarks during Tesla's earnings call suggest "this is likely to become a bona fide effort" in the next few quarters, the analyst told investors in a research note. BMO believes Tesla's efforts could be an overhang on First Solar shares "for some time" and weigh on investor sentiment.

The Tesla Competition

Last week at the World Economic Forum (WEF) in Davos, Musk said Tesla and SpaceX are targeting 100 gigawatts of annual solar manufacturing within three years. Musk reiterated the target in a call with analysts following Tesla’s fourth-quarter (Q4) results on Wednesday.

“We're building more manufacturing capacity and expect that energy will have very high growth for really as far into the future as we can imagine. The solar opportunity is underestimated,” Musk said. “So that’s why we’re gonna work towards getting 100 gigawatts a year of solar cell production, integrating across the entire supply chain, from raw materials all the way to finished solar panels,” he added.

FSLR shares subsequently slipped over 10% on Thursday.

How Did Stocktwits Users React?

On Stocktwits, retail sentiment around FSLR stayed within the ‘bullish’ territory over the past 24 hours, while message volume remained at ‘high’ levels.

A Stocktwits user noted that Tesla is producing solar panels for residential use and not utility scale like First Solar.

FSLR stock has gained 35% over the past 12 months. 

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