First Solar’s stock drops after analyst’s double downgrade, on concerns over effects of Biden presidency

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Shares of First Solar Inc. sank 6.9% in morning trading Tuesday, after Raymond James analyst Pavel Molchanov swung to bearish from bullish on the solar power systems and modules company, citing concerns over the effects of a Joe Biden presidency. Molchanov cut his rating on First Solar by two notches to a rare underperform rating from outperform; only 3% of companies covered by Raymond James in the U.S. are rated underperform. Biden’s favorable stance on renewable energy will likely actually hurt First Solar, Molchanov said, as Biden is likely to repeal the U.S. tariffs (Section 201 and Section 301) on imported photovoltaic (PV) modules that President Trump boosted to step up its trade war with China. Since the tariffs applied only to crystalline silicon modules, producers of thin film modules, like First Solar, had benefitted. “If section 201 is gone, the thin film exemption loses its value, and multiples might compress,” Molchanov wrote in a note to clients. “In our view, the market is underestimating these risks — which, to underscore, are specific to First Solar rather than the industry broadly — hence the downgrade.” Separately, Molchanov upgraded Maxeon Solar Technologies Ltd. to outperform from market perform, and the stock rose 2.7%, as Maxeon is likely to benefit from a repeal of the tariffs. First Solar’s stock has rallied 43.3% year to date, while the S&P 500 has gained 8.9%.
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