Solar Sector Analysis: Analysts Bullish On First Solar, SolarEdge, And Shoals Technologies

Mizuho Securities analysts Maheep Mandloi and David Benjamin initiated coverage on four solar power companies and announced price targets.

First Solar, Inc FSLR- Initiated With Buy, $188 Price Target 

The analyst writes that FSLR is sold out through 2026, with take-or-pay contracts that limit FSLR’s downside should module prices fall.

The analysts estimate that U.S. spot module prices will be 25-30c/watt in the next few years, despite cost-deflationary manufacturing tax credits, mainly due to undersupplied wafer and cell manufacturing in the U.S., which in turn are influenced by delays in Treasury guidance on the IRA.

Cost reductions and average selling price (ASP) adder opportunity in contracts should improve margins, analysts note.

SolarEdge Technologies, Inc SEDG- Initiated With Buy, $108 Price Target

The analyst says SolarEdge is the second-largest residential solar inverter supplier in the U.S., driven by their differentiated, patent-protected optimizer+inverter architecture.

SEDG, the analyst writes, has a strong presence in the commercial and international markets that diversifies market concentration risk, enabling it to take advantage of emergent growth opportunities globally.

Valuation appears attractive, with a nearterm demand slowdown and channel inventory destocking priced in.

Shoals Technologies Group, Inc SHLS - Initiated With Buy, $18 Price Target

SHLS has grown faster than the U.S. utility-scale market over the past three years and has been profitable, achieving positive EPS since 2021, writes the analyst.

The new products announced by the company, including solutions for battery energy storage and EV charging, are in early stages, but should contribute ~10% of revenues in 2025E, says the analyst.

The analyst is bullish on SHLS due to the secular growth in utility-scale solar, its limited competition, and growth opportunities in EV chargers, among other reasons.

Maxeon Solar Technologies, Ltd MAXN- Initiated With Neutral, $7 Price Target 

Maxeon modules sell at a premium versus high-efficiency panels from competitors and have seen a sharp correction in prices 2023, writes the analyst.

The company faces headwinds from weaker module pricing due to a global supply glut, and increased competition as they ramp up P-series module manufacturing.

The ramped up distributor network, according to the analyst, should help Maxeon better sell a premium product, and eventually can help upsell kits, batteries, EV chargers and other products.

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