House bill ‘significant positive’ for First Solar, says JPMorgan

JPMorgan analyst Mark Strouse says the House Ways and Means Committee released yesterday details for its portion of the budget reconciliation bill, including updates for the Inflation Reduction Act. The text aligns with, or exceeds, the more bullish end of investor expectations for providers solar, wind, storage, and geothermal, the analyst tells investors in a research note. JPMorgan says point out the Production Tax Credit and Investment Tax Credit were truncated from existing definitions, though credits are unchanged through 2028 and then gradually phase down until 2032, and include foreign entity of concern language for the first time one year following passage of the bill. Limitations on products from prohibited foreign-influenced entities is a “significant positive” for First Solar (FSLR) given 60% of estimated earnings over the next two years are generated by 45x credits, contends the firm. It also believes the proposal is a positive for Array Technologies (ARRY), Nextracker (NXT), Enphase Energy (ENPH), and SolarEdge (SEDG). JPMorgan also highlights the 45u nuclear credit phase down in the bill, which it views as a modest negative for GE Vernova’s (GEV) small modular reactor business.