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Investing.com -- Jefferies upgraded First Solar Inc (NASDAQ:FSLR) to Buy on stronger pricing power and clearer policy support for U.S.-based solar manufacturers, while downgrading Sunrun Inc (NASDAQ:RUN) to Underperform amid growing risks to the residential solar market.
The brokerage raised its price target on First Solar to $192 from $175, pointing to its strong position as the largest U.S.-based solar panel producer.
Jefferies said that tighter restrictions on Chinese-linked suppliers are likely to limit competition and drive demand for First Solar’s domestically produced modules.
“We take the opportunity on the latest uncertainty around the IRA to re-upgrade shares of FSLR back to Buy,” wrote analyst as First Solar’s U.S. supply chain and premium positioning offer a rare advantage.
The firm expects average selling prices for solar modules to rise meaningfully, especially if current contract pricing moves closer to 32–33 cents per watt.
Jefferies noted that First Solar is trading at a significant discount to peers despite delivering faster profit growth, and called the stock “compelling” as policy clarity improves in the coming weeks.
Meanwhile, the firm cut its rating on Sunrun to Underperform from Hold and slashed its price target to $5 from $10, warning that the U.S. residential solar market may shrink substantially due to proposed cuts in tax credits under the “One Big Beautiful Bill” moving through Congress.
As per the analysts Sunrun remains the best operator in residential solar, but that won’t be enough in a shrinking market.
Efforts to raise prices could backfire in an environment where customers are seeking lower utility bills.
The firm also cut its long-term deployment forecasts for Sunrun by up to 40% compared with current market expectations.
Jefferies remains cautious on the residential segment overall, now rating all major players, Sunrun, Enphase, and SolarEdge (NASDAQ:SEDG), as Underperform.
