First Solar: A Buy Beyond The Numbers
Portfolio Pulse from
First Solar is considered undervalued with a forward P/E of 8.1x, but its valuation is heavily influenced by the 45X tax credit. Without this credit, its valuation is less appealing, with an EV/EBIT multiple of 34x and high capital requirements. Political risks and potential repeal of the tax credit are challenges, but tariffs and domestic manufacturing support could provide stability.
February 27, 2025 | 3:45 am
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NEUTRAL IMPACT
First Solar's valuation is heavily influenced by the 45X tax credit, making it appear undervalued. Excluding this credit, the company's valuation is less attractive, with high capital needs and an EV/EBIT multiple of 34x. Political risks and potential repeal of the credit pose challenges, but tariffs and domestic manufacturing support could stabilize the company.
The 45X tax credit significantly impacts First Solar's valuation, making it appear more attractive than it might be without the credit. The potential repeal of this credit introduces political risk, which could negatively impact the stock. However, tariffs and domestic manufacturing support could provide a stabilizing effect, balancing the potential negative impacts.
CONFIDENCE 90
IMPORTANCE 80
RELEVANCE 100