What happened
Shares of First Solar (FSLR -1.46%) rose 5.6% on Wednesday, furthering a rally in the solar panel manufacturer's stock price since the passage of climate-focused legislation in mid-August.
So what
The Inflation Reduction Act of 2022 was signed into law by President Joe Biden on Aug. 16. The bill includes $369 billion in energy-security and climate-change investments designed to reduce U.S. carbon emissions by approximately 40% by 2030.
Two weeks later, First Solar announced its plan to build a new panel factory in the U.S. for roughly $1 billion. The new site is projected to produce 3.5 gigawatts (GW) of solar modules annually by 2025. For context, the entire U.S. solar industry generates about 126 GW, according to the Solar Energy Industries Association.
CEO Mark Widmar cited the Inflation Reduction Act (IRA) as a key reason the company chose to invest in its domestic manufacturing capabilities. "With that type of alignment, you can create partnerships and opportunities to grow together collectively and more of a win-win type of structure than maybe we had before the implementation of the IRA," Widmar said.
Now what
Wall Street is excited about First Solar's new expansion strategy. On Aug. 31, Bank of America analyst Julien Dumoulin-Smith reiterated his buy rating on the stock and boosted his share price forecast from $141 to $152. Dumoulin-Smith expects the company's new production capacity to drive higher shipments of premium U.S. panels, along with a corresponding boost in profits.
That same day, Baird analyst Ben Kallo also lifted his price target for First Solar, from $119 to $164, and repeated his outperform rating. Kallo believes the company's manufacturing investments will cement its place atop the U.S. solar industry.
