Shares of First Solar (NASDAQ: FSLR) declined in morning trading on Monday after Morgan Stanley downgraded the stock to Sell from Hold and raised the price target to $200 from $194. This price target offers a 3.9% downside potential from current levels.
Analysts from Morgan Stanley pointed out that the stock has surged more than 140% in the past year as the manufacturer of solar panels has been one of the biggest beneficiaries of the Inflation Reduction Act (IRA). This is because FSLR expects to receive tax credits in the range of $660 million to $710 million this year following the passage of the IRA. The IRA provides tax benefits to solar manufacturers in a bid to encourage more solar projects.
However, Morgan Stanley contends that given the ”very supportive” subsidy available to solar panel manufacturers, competition may intensify in this sector which could result in lower earnings for FSLR over the long term.
Overall, analysts rate FSLR stock a Moderate Buy based on 12 Buys, eight Holds, and one Sell.