Analyst Divergence on First Solar: Bernstein Initiates at Underperform as Bulls Push Higher

Sanford C. Bernstein initiated coverage on FSLR with an Underperform rating and a $217 price target on June 17, 2026, setting up a sharp contrast with a string of bullish calls from other major banks. Bernstein's core concern: it believes the market is pricing in the Section 45X manufacturing tax credit as a permanent feature of the policy landscape, when it is currently scheduled to phase out beginning in 2030. The firm estimates that roughly 75% of First Solar's gross margin flows from those credits, leaving core manufacturing margins near 7% on a standalone basis. Without a durable technical moat, continued booking growth, or unit economics that hold up absent subsidy support, Bernstein argues the current valuation already prices in outcomes that carry meaningful policy risk.

The initiation arrives against a backdrop of genuine operational strength. First Solar posted record first-quarter revenue of $1.0 billion in Q1 2026, reflecting 24% year-over-year growth, with gross margin expanding to 47% as higher qualifying 45X volumes and reduced freight costs flowed through the income statement. The company maintained its full-year 2026 guidance of 17.0 to 18.2 GW in volume sold and $4.9 billion to $5.2 billion in net sales, with adjusted EBITDA guided between $2.6 billion and $2.8 billion. Contracted backlog stood at 47.9 GW with an aggregate transaction price of $14.4 billion through 2030. UBS raised its price target to $330 from $290, and Mizuho lifted its target to $300 from $243, both citing the company's domestic manufacturing advantage relative to tariffed Chinese competition.

The key fault line between bulls and bears is whether policy clarity or policy risk dominates the outlook. Bulls point to First Solar's unique position as the only scaled thin-film manufacturer with fully domestic U.S. production, making it a direct beneficiary of both Section 45X credits and tariffs on crystalline-silicon panels from Asia. Bears, led by Bernstein, argue that a valuation that assumes all of those policy tailwinds persist indefinitely leaves little margin for error if trade or tax policy shifts. Investors tracking FSLR will want to watch upcoming developments on the Section 232 tariff review and any Congressional signals on 45X credit longevity, as those two policy levers are the primary swing factors in the analyst disagreement. This is not financial advice.