By Mackenzie Tatananni

First Solar stock has seen healthy gains over the past year, surging 28% to outstrip the S&P 500's 17% gain. However, investors are likely to be underwhelmed by the stock's performance in 2026, Jefferies says.

Analysts led by Julien Dumoulin-Smith downgraded the stock to Hold from Buy in a note Wednesday. The team also adjusted their price target slightly lower for First Solar to $260 from $269, citing limited upside potential for the maker of solar panels.

Expectations surrounding the stock are "richer than reality," the firm argued, pointing to a host of red flags including limited booking visibility. Throughout 2025, the company repeatedly lowered its guidance in the face of margin compression and higher debookings, which are cancellations of future orders.

On a call with investors in October 2025, the company said it had terminated 6.6 gigawatts of bookings under multiyear agreements defaulted on by affiliates of oil and gas major BP. Total debookings since the last earnings call came in at 6.9 gigawatts, against an expected contracted backlog of roughly 54.5 gigawatts.

Despite these issues, First Solar shares rallied to 52-week highs last year as concerns over the passage of the One Big Beautiful Bill Act eased. On Wednesday, the stock was down 9.5% at $243.23, still above the middle of its 52-week range.

Looking ahead, Jefferies expects "limited incremental policy support to justify current levels," as investor focus likely shifts to execution and use of cash rather than regulatory upside. Any policy-related tailwinds will likely underwhelm investor expectations, too, the firm said.

First Solar has continually shifted production out of heavily-taxed markets in Southeast Asia. In August, the company announced that a new production facility had come online in Louisiana. In the third quarter, 2.5 gigawatts of a total 3.6 gigawatts of solar equipment were made in U.S. factories.

Jefferies expects First Solar to reach up $10 billion in net cash by 2028; however, deployment opportunities are "likely more limited" with a focus on finishing lines in 2026. Finishing lines are the part of the manufacturing process where semifinished modules are completed, tested, and prepared for shipment

In late October, the company said it planned to open a new 3.7 gigawatt annual-capacity solar module finishing line in the U.S.

Still, prospective buybacks in years to come "could create a positive surprise," the analysts wrote. They're waiting for updates from management on the coming fourth-quarter earnings call.

The tone of Wednesday's note is markedly more cautious than attitudes of many others on Wall Street. Of 39 firms polled by FactSet, 31 rate the stock at Buy or Overweight. Seven, including Jefferies, rate it at Hold, while KeyBanc Capital Markets is the only one to rate it Underweight.

Write to Mackenzie Tatananni at mackenzie.tatananni@barrons.com

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January 07, 2026 11:09 ET (16:09 GMT)

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