First Solar is headed for its worst annual stock performance since 2018. But Democrats' midterm election wins are giving some on Wall Street reason to turn bullish.
William Blair analyst Jed Dorsheimer upgraded First Solar stock to Outperform from Market Perform based on the idea that the blue wave will lead to a much more favorable environment for solar stocks. The analyst didn't have a price target on the stock.
In addition to winning control of Congress, Democrats won governorships in Texas, Georgia, Ohio, Iowa, and Nevada. Those statewide gains by Democrats are arguably just as important for First Solar and the solar industry, according to Dorsheimer.
"We believe this will unlock support at a local level for more utility-scale solar procurement and siting. We view First Solar as the best-positioned original equipment manufacturer of utility-scale solar panels in the U.S," Dorsheimer said in the research note.
The analyst added, however, that while the state-level tailwinds will be positive for the long-term prospects of First Solar, "it will take time to show up in bookings."
First Solar stock was down 2.7% at $189.35 on Thursday following a 4.6% advance in the previous session. The stock on Wednesday closed above its 50-day moving average, currently at $187.20, for the first time since early August.
The Invesco Solar ETF declined 3.7% on Thursday after rising 5.7% on Wednesday. Shares of solar equipment company Enphase Energy fell 7.4% on Thursday, while solar company Sunrun gained 6.1% Fellow solar stocks SolarEdge and Nextpower declined 12% and 10%, respectively.
After two rough years for stocks in the solar, wind and electric vehicle industries, Tuesday's election night wins for Democrats could give the solar sector a new lease on life.
Shares of First Solar, a top solar panel manufacturer, have underperformed this year, falling 25% as of Thursday, in part due to a global oversupply of solar panels and components, combined with higher financing costs for its customers, which have slowed demand.
The stock was on pace Thursday for its worst yearly performance since 2018, according to Dow Jones Market Data.
But with Democrats controlling the House and Senate next year, pro-renewables legislation could make a comeback, even though President Donald Trump could still veto any bills.
How the blue wave translates into more business for First Solar, and how long that could take, is an open question.
First Solar at the end of October projected net sales for the year of $4.6 billion to $4.9 billion, down from its previous guidance of $4.9 billion to $5.2 billion. That new guidance also marks around a 9% decline in sales from 2025 at the midpoint.
The election results give First Solar and other solar companies a potential boost, and Wall Street, including William Blair, has a positive view on First Solar.
The stock has an average rating of Overweight, the equivalent of a Buy, and an average price target of $257.17, according to FactSet.
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