First Solar (NASDAQ: FSLR) stock price has staged a strong recovery in the past few months even as challenges in the solar industry have remained. It rose to a high of $171 on Monday, its highest point since January 2nd. As a result, it is up by over 33% from its lowest point in 2023.
Solar power glut is continuingFirst Solar is one of the biggest players in the solar energy industry. It is a key solar panel manufacturer with plants in the US, Vietnam, and India.
The company is in an industry that is going through major headwinds as the sector goes through a major glut. According to the FT, the price of solar panels has crashed to a record low of less than $0.2 per watt. This is a big discount considering that the panels were selling for over $1.5 a decade ago.
Solar panel module prices
Solar panels have become so cheap that some people have started using them for fencing purposes. This is happening as the global supply is expected to rise to 1,000 gigawatts this year, three times the global demand.
To some extent, First Solar has been relatively immune to these concerns because of the protectionist policies of the Biden administration. Primarily, the firm has benefited from the Inflation Reduction Act (IRA). The company noted this in its recent 10k report, saying:
“Although module average selling prices in many global markets have generally declined for several years, near-term module pricing in the United States, our primary market, remains strong primarily due to the rising demand for domestically manufactured modules as a result of the IRA.”
First Solar also benefits because its business mostly focuses on large-scale projects. These utilities are continually increasing their solar projects in the US. As a result, the company gained additional contracts worth about 28.3 gigawatts in 2023. It ended the fourth quarter with a backlog of 61.4 gigawatts.
First Solar has enough project backlogs through 2026. This means that even if the company does not receive more deals this year, it will being sold out for two years.
First Solar also published strong financial results in the last quarter. Its net sales rose to $1.2 billion, a 15% increase from the same period in 2023. For the year, the company’s net sales rose to $3.3 billion up from $2.6 billion a year earlier.
First Solar stock price forecast
The daily chart shows that the FSLR share price has been in a strong uptrend in the past few months. It has formed a slanted double-bottom pattern whose neckline is at $177.60. In most cases, this pattern is usually a bullish sign.
The stock has risen above the 200-day and 50-day Exponential Moving Averages (EMA). It is about to form a golden cross pattern, which happens when the two averages cross each other.
First Solar’s oscillators like the Relative Strength Index (RSI) and the MACD have all pointed upwards. Therefore, the outlook for the stock is bullish if it moves above the neckline of the double-bottom pattern at $177.60. If this happens, the stock will likely rise to $200.
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