By Paul R. La Monica
First Solar's stock rose more than 5% Friday and was up again on Monday morning, a possible indication that investors are betting Vice President Kamala Harris will defeat former President Donald Trump on Tuesday.
A weekend poll showing Harris with an unexpected lead over Trump in Iowa, a state the Republican candidate won in 2016 and 2020, has led to higher expectations that Harris may win the race for the White House. A Harris presidency could be a positive for solar-energy companies, as well as other alternative-energy providers such as wind and hydroelectric-power firms.
First Solar shares were up 6% on Monday morning. They got a similar pop after the Harris-Trump debate in September.
The iShares Global Clean Energy and Invesco Solar exchange-traded funds, which each have First Solar and fellow solar firm Enphase Energy as their top two holdings, were up 2.5% and 4%, respectively, on Monday. Shares of Enphase Energy rose 4%.
Analysts at Citi said in a recent report that if Harris wins, "we would expect a sharp recovery" for First Solar's stock. Despite their recent rebound, the shares are still down nearly 30% from the 52-week high they hit in June.
The Citi analysts wrote that they also think solar stocks Sunrun and Array Technologies will perform well if Harris is the victor. Both stocks were up about 10% Monday morning,
A Trump win, on the other hand, would likely be viewed as a plus for oil stocks given the former president's "drill baby drill" mantra.
Still, analysts at J.P. Morgan noted in a report last week that First Solar could stage a comeback even if Trump gets a second term. They argued that the stock "is well positioned...in any scenario of the upcoming US election."
That is because Trump could impose even tougher tariffs on solar panels from Chinese companies. A Harris presidency would mean the status quo, an extension of solar tax credits and incentives that were part of the Inflation Reduction Act passed during Joe Biden's presidency.
Of course, it may not be that simple. As Laura Sanicola pointed out in the most recent Barron's Energy Insider newsletter ( click here to subscribe), solar companies in the U.S. still face numerous challenges. Residential installation costs are high and competition from cheaper solar panels made in China remains intense, even with the possibility of higher tariffs on imports.
Worries about competition from Chinese solar companies also hurt First Solar's most recent earnings. Management's financial forecasts were weaker than expected due to executives' concerns about cheaper solar panels flooding the lucrative Indian market.
So even if Harris does beat Trump, the solar and clean-energy sectors will continue to face challenges.
Write to Paul R. La Monica at paul.lamonica@barrons.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
November 04, 2024 12:07 ET (17:07 GMT)
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