Wells Fargo optimistic about solar industry despite potential changes to tax credits

From Investing.com: 2024-07-27 04:06:02

Analysts at Wells Fargo believe fears of a solar sector selloff under a Trump presidency are exaggerated. Inflation Reduction Act (IRA) tax credits for solar may face changes, but the impact might not be as severe as anticipated. The industry benefits from the 45X credits and ITCs, which support job creation and manufacturing in the U.S.

Despite uncertainties surrounding solar tax credits, Wells Fargo maintains an optimistic outlook for the industry. The potential repeal of ITCs could slow reshoring efforts and hinder investment in solar manufacturing. However, maintaining the 45X credits is crucial for attracting manufacturing to the U.S. and promoting domestic job growth in the solar sector.

Wells Fargo views First Solar, Inc. (FSLR) as a buying opportunity even in the face of potential ITC changes. The market may be overreacting to the solar tax credit uncertainties, and FSLR’s stock price could be undervalued. Analysts predict FSLR’s ASPs to remain strong despite policy changes, offering a positive outlook for the company.

Potential policy changes, such as the elimination of domestic content and base ITCs, could impact FSLR’s ASP negatively. Conversely, increased tariffs on Chinese imports could benefit FSLR by reducing competition. Despite the uncertainty surrounding solar tax credits, companies and utilities with decarbonization goals are expected to continue solar projects, albeit under higher PPAs to offset lower tax credits.



Read more at Investing.com: Are Solar Tax Credits Safe if Trump Wins? By Investing.com