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The solar power industry has struggled over the last year with mounting panels and rising interest rates. But one outlier is First Solar (FSLR), the largest solar module maker in the United States.
Shares of the Tempe, Arizona-based company rose 6% on Wednesday after the company announced better-than-expected quarterly profits and a positive outlook. The company expects sales to be between $4.4 billion and $4.6 billion this year, compared to analysts’ expectations of $4.53 billion.
“Despite industry macro challenges such as global oversupply and price volatility, medium- to long-term demand remains strong, particularly in the U.S.,” First Solar CEO Mark Widmer said in an earnings call. Strong,” he said.
The manufacturer caters to the utilities sector with customers such as NextEra Energy (NEE) and LightSource BP. These types of contracts typically have longer lead times than solar companies’ residential or commercial contracts.
“Our current backlog is cumulatively oversold through 2026, with reservations extending into the end of the decade, providing options during a period of pricing and policy uncertainty. ” said First Solar CFO Alex Bradley on a conference call.
“Simply put, if we don’t book any more deals by the end of the year, we will remain sold out until two years into 2025-2026,” he added.
First Solar is a major beneficiary of the Inflation Control Act, which allows domestic solar manufacturers to sell tax credits to other companies. Last year, the company agreed to sell $687 million in tax credits to fintech company Fiserv (FI).
Wall Street analysts are bullish on the stock, with 25 buy recommendations and 7 hold recommendations. Still, First Solar shares are down 12% since the beginning of the year, reflecting the sector-wide weakness.
Shares of SolarEdge (SEDG), an inverter maker that converts energy produced by solar panels, rose last week after the company announced a weaker-than-expected earnings outlook for the current quarter due to slowing housing demand and rising inventory. It fell. Chief Executive Officer Zvi Land said at a fourth-quarter earnings conference that he doesn’t expect any major changes in the market until interest rates come down.
Rising interest rates are impacting the renewable energy sector as clean energy projects are capital intensive. Installation loans are also expensive.
To make matters worse, falling valuations are making it difficult for companies to enter the public markets to finance projects.
The Invesco Solar ETF (TAN) is down 18% since the beginning of the year as headwinds continue across the industry.
Ines Ferre is a senior business reporter at Yahoo Finance. Follow her on Twitter @ines_ferre.
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