Why Morgan Stanley Cut First Solar’s (FSLR) Target as Pricing Recovery Slows

Core Insights - First Solar, Inc. is recognized as one of the top renewable energy stocks to invest in, but Morgan Stanley has adjusted its outlook, lowering the price target due to slower margin recovery and softer pricing expectations for 2026 [1][4]. Financial Performance - For Q4 2025, First Solar reported net sales of $1.7 billion, contributing to full-year 2025 net sales of $5.2 billion, which is an increase from $4.2 billion in 2024. The growth in Q4 was primarily driven by an increase in module volume sold, while the full-year growth was attributed to a 24% rise in third-party module volume [2]. - The diluted EPS for Q4 was $4.84, and for the full year, it was $14.21 [2]. Cash Position and Guidance - At the end of 2025, First Solar had a net cash balance of $2.4 billion, up from $1.5 billion in the previous quarter. This increase was mainly due to proceeds from sales of Section 45X tax credits and operating cash flow, partially offset by capital expenditures related to its Louisiana facility [3]. - For 2026, the company has guided net sales between $4.9 billion and $5.2 billion, with expected volume sold of 17.0 GW to 18.2 GW, and adjusted EBITDA projected between $2.6 billion and $2.8 billion [3].