First Solar $FSLR rises 15% on 64GW multi-year sales backlog, US capacity ramp, and strong 2025 ASPs

First Solar’s impressive sales backlog and ongoing capacity expansions in the United States position the company for sustained growth amid favourable policy tailwinds, underscoring a compelling valuation case in the renewable energy sector.

The Backbone of Visibility: A Substantial Sales Backlog

In the rapidly evolving solar industry, a robust sales backlog serves as a critical indicator of future revenue stability. For First Solar, recent financial disclosures reveal a contracted backlog of approximately 64 gigawatts (GW), extending well into the coming years. This figure, reported in the company’s second-quarter 2025 earnings, reflects commitments that provide multi-year visibility, mitigating the cyclical risks often associated with renewable energy markets.

Such a backlog not only insulates against short-term demand fluctuations but also highlights First Solar’s competitive edge in securing long-term contracts. Analysts note that this level of order security is particularly valuable in an environment where global solar installations are projected to reach around 641 GW annually by the end of 2025, according to industry forecasts. The company’s focus on cadmium telluride (CdTe) thin-film modules, which offer advantages in efficiency and lower production costs, has evidently resonated with utility-scale buyers seeking reliable, high-performance solutions.

Pricing Dynamics and New Bookings

Recent bookings further bolster this narrative, with new deals averaging an average selling price (ASP) in the range of 30 to 32 cents per watt, based on patterns observed in 2025 transactions. This pricing strength stems from a combination of technological differentiation and supportive market conditions, including tariffs on imported panels that enhance the appeal of domestically produced alternatives. For instance, First Solar’s ability to command these premiums underscores its positioning in premium segments, where buyers prioritise quality and supply chain reliability over the lowest-cost options from overseas competitors.

Industry observers point out that this ASP level, while competitive, allows for healthy margins in an era of declining global module prices. With raw material costs stabilising and manufacturing efficiencies improving, these contracts could translate into expanded profitability. Projections from analyst models suggest that if First Solar maintains this pricing trajectory, it could achieve gross margins approaching 40% in the medium term, a marked improvement from historical averages.

Capacity Ramp-Up: Betting Big on U.S. Manufacturing

Central to First Solar’s strategy is its aggressive expansion of production capacity within the United States, a move that aligns with national priorities for energy independence and domestic manufacturing. The company recently operationalised a 3.5 GW facility in Alabama, which has already contributed to pushing its total U.S. manufacturing capacity to around 11 GW. This plant, representing a significant investment, is expected to create hundreds of jobs while enhancing supply chain resilience.

Looking ahead, First Solar is on track to bring online another 3.5 GW factory in Louisiana by 2026. These developments are not merely expansions but strategic responses to burgeoning domestic demand, fuelled by incentives under the Inflation Reduction Act (IRA). The IRA’s provisions, including tax credits for advanced manufacturing, have catalysed investments in clean energy infrastructure, with First Solar poised to capture a substantial share.

From a broader perspective, U.S. solar manufacturing capacity has surged in recent years, reaching over 26 GW annually by mid-2024, according to industry reports. First Solar’s initiatives account for a meaningful portion of this growth, positioning the firm to meet escalating installation targets. Analyst sentiment, as captured by ratings averaging a ‘Buy’ recommendation with a consensus score of 1.6 on a scale where 1 is strong buy, reflects confidence in these expansions driving output and market share gains.

Navigating Industry Trends and Challenges

The solar sector’s trajectory remains upward, with U.S. installations hitting a record 11.8 GW in the first quarter of 2024, building towards projections of 53 GW for the full year of 2025. However, challenges persist, including potential policy uncertainties and supply chain imbalances. First Solar has acknowledged under-allocation issues for certain international production lines, stemming from customer shifts due to tariff implementations, yet its U.S.-centric approach mitigates some of these risks.

Global trends further contextualise this: annual renewable capacity additions are forecasted at 585 GW for 2024, dominated by solar at 77%. By 2030, estimates suggest a staggering 5,500 GW in total additions, underscoring the sector’s pivotal role in the energy transition. First Solar’s backlog and capacity plans align seamlessly with this momentum, potentially enabling the company to outpace peers in execution.

Valuation Appeal Amid Tailwinds

Turning to valuation, First Solar trades at a forward price-to-earnings (P/E) multiple of approximately 9.87, based on analyst estimates for earnings per share (EPS) of 20.86 in the coming year. This single-digit multiple appears attractive relative to the sector’s growth prospects, especially when juxtaposed against historical averages and competitors’ valuations. The company’s trailing twelve-month EPS stands at 11.70, with current-year projections at 15.43, indicating accelerating earnings power.

Supporting this is a solid balance sheet, with net cash positions improving to 0.6 billion dollars as of the second quarter of 2025, bolstered by proceeds from tax credit sales under Section 45X. Such financial durability, combined with IRA-driven incentives, provides a buffer against volatility and funds further expansions without excessive dilution.

Market data as of 15 August 2025 shows First Solar’s shares closing at 205.80 dollars, marking a 14.3% increase from the previous close, on elevated volume of over 5.3 million shares—more than double the 10-day average. This session’s performance, amid a 20.7% rise over the past 50 days, reflects investor recognition of these fundamentals. Over a 200-day horizon, the stock has gained 24.4%, outperforming broader market indices and signalling sustained momentum.

Risks and Forward Outlook

While the outlook is promising, risks include tariff escalations disrupting global supply chains and potential slowdowns in installation growth, with some forecasts warning of a 10% drop in U.S. capacity additions by 2030 if incentives wane. Analyst models, however, project resilient demand, with First Solar’s U.S. focus offering a hedge.

In summary, First Solar’s 64 GW backlog, strategic U.S. expansions, and attractive valuation metrics paint a picture of a company well-equipped for the solar boom. As policy tailwinds persist, investors may find this an opportune moment to assess the firm’s role in the clean energy landscape.

References

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