BMO has raised its target price for CECEP Solar Energy (FSLR.US) to $263: The stock was unjustly punished under the impact of the 232 tariffs, and improvements in orders and profits are expected to drive a reassessment.

BMO Capital has upgraded the stock rating of the solar panel manufacturer CECEP Solar Energy (FSLR.US) from "Market Perform" to "Outperform," and raised the price target from $237 to $263, indicating an upside potential of about 25% compared to the stock's closing price of $210.10 on Thursday. BMO noted that CECEP Solar Energy's stock price fell approximately 16% following the implementation of Section 232 of the U.S. Trade Expansion Act, and this decline is seen as excessive. Analyst Ameet Thakkar stated that the upgrade of the stock rating is primarily based on three factors: first, the company's valuation has become attractive after the implementation of Section 232; second, there is potential for order re-rating over the coming years; and third, the market has fully priced in the threat posed by Tesla, Inc. In his view, the impact of these three factors will outweigh the temporary profit margin lows expected between 2026 and 2027. Analysts pointed out that the 15% tariff stipulated by Section 232 and the minimum import price policy should keep the prices of CECEP Solar Energy components in the U.S. stable at around $0.43 to $0.44 per watt in the long term. CECEP Solar Energy's capacity is effectively sold out until 2028, so the company is expected to increase its order shipment ratio in the coming quarters, even as profit margins face headwinds that may persist until 2027. Analysts added that the rating upgrade reflects their expectation that the pricing environment for domestically produced CECEP Solar Energy components will become increasingly favorable, which should help CECEP Solar Energy improve its order shipment ratio, expand long-term profit margins, and drive substantial growth in EBITDA once usable capacity is available in 2029.