What’s going on
stocks First Sun On Wednesday (FSLR 5.64%) rose 5.6%, continuing the solar panel maker’s share price gains following the passage of climate-focused legislation in mid-August.
The Inflation Relief Act of 2022 was signed into law by President Joe Biden on August 16. The bill includes $369 billion in energy security and climate change investments designed to reduce US carbon emissions by nearly 40% by 2030.
Two weeks later, First Solar announced plans to build a new panel factory in the US for about $1 billion. The new site is projected to produce 3.5 gigawatts (GW) of solar modules annually by 2025. For context, the entire U.S. solar industry generates about 126 GW, according to the Solar Energy Industries Association.
CEO Mark Widmar cited the Inflation Reduction Act (IRA) as the main reason the company chose to invest in local manufacturing capabilities. “With this kind of alignment, you can create partnerships and opportunities to grow together, and maybe create a more win-win structure than we had before the introduction of the IRA,” Widmar said.
Wall Street is excited about First Solar’s new expansion strategy. On August 31 Bank of America analyst Julien Dumoulin-Smith reiterated his buy rating on the stock and raised his share price forecast to $152 from $141. Dumoulin-Smith expects the company’s new production capacity to enable a higher supply of premium panels from the US and to increase profits accordingly.
Later that day, Baird analyst Ben Kallo also raised his price target for First Solar to $164 from $119 and reiterated his outperform rating. Kallo believes the company’s manufacturing investments will strengthen its position in the US solar industry.
Bank of America is an advertising partner of The Ascent, a Motley Fool company. Joe Tenebruso has no position in any of the stocks listed. The Motley Fool recommends First Solar. The Motley Fool has a disclosure policy.