First Solar Stock Falls After Downgrade

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•  07 Jan 2026
 

•   FSLR  
   
  +2.00%
•   SEDG  
   
  -1.27%

$FSLR First Solar shares dropped more than 10% after Jefferies cut its rating from Buy to Hold, raising fresh questions for investors about valuation, demand visibility, and what comes next for the solar sector. The move stood out not only because of the sharp price reaction, but because it challenged a largely optimistic Wall Street narrative that had supported the stock through much of 2025.

Jefferies lowered its price target to $260 from $269, arguing that much of the positive outlook is already reflected in the share price. After gaining roughly 28% last year, well ahead of the S&P 500 SPY, First Solar entered 2026 with high expectations. According to the bank, those expectations now face pressure from margin erosion, order cancellations, and limited clarity on future bookings. This is less about one analyst call and more about the balance between growth stories and execution risk.

First Solar disclosed that total cancellations have reached about 6.9 gigawatts, including 6.6 gigawatts tied to contracts with BP-related entities that did not meet obligations. While the company still reports a sizable backlog of around 54.5 gigawatts, these cancellations reduce confidence in revenue forecasting. Markets tend to react strongly when visibility weakens, especially in capital-intensive industries like renewable energy.

Despite the sharp move in FSLR, the impact on SolarEdge $SEDG was limited, with the stock down less than 1%. The reason is structural rather than emotional. First Solar operates mainly in large-scale utility solar projects and module manufacturing, using its thin-film cadmium telluride technology. SolarEdge, by contrast, focuses on inverters and power electronics for residential and commercial distributed systems. The Jefferies downgrade does not materially change SolarEdge’s near-term business outlook, although a cautious tone toward the sector can still influence sentiment across renewable energy stocks.

What makes this downgrade notable is how it contrasts with other recent analyst views. Wells Fargo recently reaffirmed an Overweight rating with a $285 target, while UBS lifted its target to $330, citing strong long-term demand for clean energy and First Solar’s competitive positioning in the US market. GLJ Research has been even more optimistic. At the same time, firms like KeyBanc remain cautious, pointing to risks that may not be fully priced in. Jefferies now occupies a middle ground, neither bearish nor willing to endorse further upside without clearer operational progress.

From a strategic perspective, First Solar continues to build on its US manufacturing footprint. A new Louisiana facility became operational last year, and domestic output accounted for about 2.5 gigawatts of the company’s 3.6 gigawatts of production in the third quarter. The company plans to open a new US finishing line with annual capacity of 3.7 gigawatts, strengthening its control over the final stages of module delivery. These moves align with long-term policy trends but also require significant capital and flawless execution.

Jefferies estimates that First Solar could reach net cash of roughly $10 billion by 2028. While this provides financial strength, the bank cautions that much of the cash may be needed to complete planned production and finishing lines, limiting flexibility for share buybacks or other capital returns in the near term. For investors hoping excess cash will quickly translate into shareholder rewards, the timeline may be longer than expected.

On the day of the downgrade, FSLR traded around $243, a sharp decline but still within its yearly range. The message from the market is not that First Solar’s long-term story is broken, but that enthusiasm may cool as regulatory tailwinds stabilize and attention shifts toward margins, backlog quality, and execution discipline.

First Solar stock has become more sensitive to earnings updates and order flow data than to broad clean-energy headlines. For longer-term investors, the current pullback raises a familiar question: is this a temporary reset after a strong run, or the start of a more valuation-driven phase for renewable energy leaders? The answer is likely to emerge not from analyst targets, but from how convincingly First Solar turns its backlog and manufacturing expansion into predictable results. Those looking beyond the headlines may want to examine the next earnings report more closely.

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