First Solar (FSLR US) Q1 Report
Hi MM, Following FSLR's ill-received Q1 report, missing some estimates, and talking about the impact of tariffs on 2025 guidance, what are MM's updated views on, and plans for, the stock? Thanks Darren
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Answer
Hi Darren,
We wrote about FSLR on Friday morning following their quarterly;
The American based Solar Technology company reported quarterly earnings late on Tuesday that were lower than expected, and they downgraded FY25 guidance. While this was not a significant shock given the weakness in the shares leading into the result, with FSLR now trading on just 7x earnings, shares did initially react negatively, though, they have since recovered some of the decline.
The main issue stems from the uncertainties around tariffs and how it will impact their overseas manufacturing roll-out. While they have a large US manufacturing footprint, with plants in Ohio and Alabama, and they’re constructing a new facility in Louisiana, expected to be operational by 2026, they also have operations in Malaysia, Vietnam, and India, along with a recycling facility in Germany. The uncertainty around what tariffs will ultimately look like has impacted their forward guidance.
For 1Q25, FSLR reported:
- Net sales $US844.6 million, inline with expectations for $841.1 million
- Earnings Per Share (EPS) $US1.95, below expectations of $2.48
The FY25 guidance was the key, and a wide guidance range implies a range of scenarios on tariffs. They now see net sales for the year of $US4.5 billion to $5.5 billion, down from $US5.3 billion to $5.8 billion, with EPS of $US12.50 to $17.50, down from$17 to $20. This downgrade to guidance reflects tariffs reverting to country specific levels resulting in plant closures i.e. a worst-case scenario at the low end of the range implying that FSLR are being conservative, as they should be with such a fluid situation.
- We continue to like America’s largest, and most established solar module manufacturer, and the country’s only fully vertically integrated producer. On a single digit multiple, this is one stock that could benefit greatly from a more benign tariff outcome.
Brokers generally cut earnings forecasts, but maintained a positive stance on the stock. We intend to hold what we’ve got, and add to it when more clarity around trade policy emerges.
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First Solar (FSLR US) broker calls – Source Bloomberg
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First Solar (FSLR US) broker calls – Source Bloomberg
