The run-up in shares of First Solar may have finally reached its limit, according to Citi. Analyst Vikram Bagri downgraded the solar stock to sell from neutral, citing a challenging long-term growth trajectory and concerns that Inflation Reduction Act tailwinds may already be priced in. "We believe FSLR's long-term outlook for margins and growth will draw increased scrutiny as the global supply of Si-based modules rises while the cost drops," he said in a note to clients published Friday. FSLR YTD mountain Shares have gained nearly 45% this year Shares lost more than 2% before the bell. The stock's gained about 45%, building on last year's roughly 72% gain. The solar company outperformed in 2022, even as the S & P 500 saw its worst year since 2008 , due to the passage of the climate bill offering a slew of clean energy tax credits. Along with the downgrade, Bagri trimmed the firm's price target to $194 from $220 a share, reflecting a near 11% downside from Friday's close. Key to Bagri's downgrade is the concern that price declines in polysilicon, a large input in solar panels, could put pressure on silicon-based modules and limit margin upside. A sharper decline draw scrutiny toward to "terminal value of FSLR technology." "Global excess supply of polysilicon and PV modules should put downward pressure on module ASPs, limiting FSLR's ability to contract volumes beyond 2026 at attractive prices," Bagri wrote. "Furthermore, US domestic module supply is likely to exceed demand starting 2026." Along with the downgrade, Bagri opened a 90-day positive catalyst watch on Enphase Energy ahead of first-quarter earnings, citing a strong backlog and expectations for solid results. He also opened a 30-day positive catalyst watch on Sunrun , citing similar catalysts. Both stocks have are down 15.6% and 12%, respectively in 2023. — CNBC's Michael Bloom contributed reporting
