First Solar’s (NASDAQ: FSLR) stock price is in the depths of a correction that will soon end. The correction is due primarily to political fears that have little to do with underlying demand and the long-term outlook for profits. The takeaway for investors is that the Q1 results were strong, the guidance favorable, and the valuation attractive for this profit-producing green-energy play. 

Analysts' activity has been vigorous since the last earnings report, putting the stock in the top ten Most Upgraded Stocks tracked by MarketBeat. MarketBeat.com tracks 16 updates since the Q1 results were released, and while mixed, they are leading the market higher. The two downgrades and two price target revisions are a concern but failed to alter the trend in sentiment, which is improving. The consensus rating rose to Moderate Buy from Hold in the last six months, and the price target has also increased. The consensus price target, which is 20% above the current action, is up 25% in the previous year, and both should continue to rise through year-end because of business performance. 

First Solar Growth Accelerates; Gets Boost From EPEAT Certification

First Solar’s FQ1 was solid, with top and bottom-line results outperforming the consensus estimates. The company grew revenue by 45%, accelerating its growth sequentially compared to last year and compounding its strength with solid guidance. Among the highlights from the report are robust margins, which resulted in 1000 basis points of outperformance on the bottom line and a solid backlog of more than 78GW of expected sales. 

Guidance is mixed. Revenue and earnings targets were reaffirmed; the offsetting factor is that CAPEX plans, centered on expanding to meet increasing demand, were increased. The salient point is that the guidance aligns with the analysts' consensus at the midpoint for earnings, and the expected EPS of $13 to $14 is double that of last year. With the stock trading at only 16x this year’s earnings and 10x next, it is a deep value for investors. 

Among the reasons to believe that guidance is cautious is the recently awarded EPEAT+ Climate Champion Certification. This is the first of its kind in the solar industry and should lead to accelerating sales. The certification means that First Solar Series 6 Plus and Series 7 meet the ultra-low threshold for manufacturing impact, making them the greenest solar cells globally. Because EPEAT is a globally recognized standard, the certification should boost demand from leading solar end markets, including the data center market, which is seeing increased demand for power due to AI. 

Insiders and Institutions Sell First Solar Stock 

Insider and institutional selling has been a headwind for FSLR stock for the last two quarters. Insiders, who own a small 0.55% of the company, ramped up their selling in Q1 and Q3, raising potential red flags. However, the increase in sales aligns with the company’s share-based compensation, which also increased over the last twelve months. Share-based compensation increased by 70% to $34.2 million, a little more than double what was sold by insiders. 

Institutional selling is more of a problem. Institutions own nearly 100% of the company and have sold on balance for four of the last five quarters. If this activity persists, the stock price will have difficulty moving higher regardless of what the analysts say. 

First Solar Stock Falls To Critical Support

First Solar stock is down 20% from its recent high and may fall further, but it shows signs of support. The market halted at the critical $220 level and began to rebound. The rebound could retest the recent high, as the MACD momentum converges with the rally seen in the year's first half. A move to fresh highs is possible but unlikely until later in the year when more information is available on this tech stock.