First Solar (FSLR) prospects for a recovery in margins and pricing look more cautious in 2026 despite accelerating demand tied to data-center power needs, Morgan Stanley said Monday in a report.

After First Solar reported lower-than-expected Q4 margins, Morgan Stanley cut its 2026 shipment forecast to 17.6 gigawatts from 19.7 gigawatts and expects an average selling price of $0.287 per watt, down from $0.315

Morgan Stanley said upcoming policy actions on tariffs may lift industry pricing as the year progresses. Tighter trade rules may support First Solar's pricing power and eventually improve margins and earnings before interest, taxes, depreciation and amortization, potentially creating a more attractive entry point for the stock later in 2026, the report said.

Morgan Stanley expects bookings to accelerate as policy clarity improves and customers lock in US-made module supply. A price recovery would meaningfully benefit margins in 2027 and 2028 as manufacturing costs decline and new capacity ramps up, the report said.

Morgan Stanley trimmed its price target on First Solar stock to $230 from $275 and maintained its overweight rating on the stock.

Price: 195.21, Change: -1.99, Percent Change: -1.01