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On Wednesday, Barclays (LON:BARC) made adjustments to its outlook on Array Technologies (NASDAQ:ARRY) shares, reducing the price target from $9.00 to $8.00, while sustaining an Overweight rating on the company’s stock. The solar tracking systems manufacturer, currently valued at approximately $859 million, has seen its stock decline by nearly 18% in the past week. According to InvestingPro analysis, the stock appears undervalued at current levels.
The adjustment follows a detailed commentary from Barclays analysts regarding Array Technologies’ financial prospects. The analysts noted that rising steel prices could potentially lead to increased revenue and gross profit as awarded orders transition into the backlog. They also mentioned that the risk of debooking, or the cancellation of orders, is likely to diminish since all of the Brazilian orders have already been removed from the company’s books. The company maintains a healthy financial position with a current ratio of 2.28, indicating strong liquidity to meet short-term obligations.
Array Technologies’ expected low gross margin for the first quarter was attributed to the legacy Variable Cost Agreement (VCA), as well as a higher proportion of low-margin international business. This insight provides a clearer understanding of the factors influencing the company’s near-term financial performance.
Despite the reduced price target, the Overweight rating indicates that Barclays continues to view Array Technologies’ stock favorably in the longer term, suggesting confidence in the company’s market position and future growth potential.
Investors and stakeholders in Array Technologies will be monitoring the company’s performance closely, particularly in relation to how external factors like steel prices and international business mix affect its financial outcomes. The updated price target from Barclays reflects the latest evaluation of these elements and their anticipated impact on the company’s valuation.
In other recent news, Array Technologies reported its fourth-quarter 2024 earnings, revealing a slight miss on earnings per share (EPS) with $0.16 against the forecasted $0.18. However, revenue for the quarter was $275.2 million, slightly exceeding expectations. Despite a challenging year with a 42% decline in full-year revenue to $960 million, the company improved its adjusted gross margin to 34.1%, reflecting better cost management. Looking forward, Array Technologies projects a 20% revenue growth for 2025, with anticipated revenue between $1.05 billion and $1.15 billion.
Seaport Global Securities recently downgraded Array Technologies from Buy to Neutral, citing struggles in closing competitive gaps with its main rival and worsening market conditions in Brazil. Mizuho (NYSE:MFG) Securities also adjusted its outlook, lowering the stock target to $9 from $11 while maintaining a Neutral rating due to lower sales projections and profitability concerns. The company faces significant challenges in its largest foreign market, Brazil, which has affected its financial expectations.
Despite these challenges, Array Technologies has shown resilience through improved gross margins and strategic initiatives in domestic content and product offerings. Investors will be closely watching how the company navigates these market conditions and whether it can leverage its strategies to regain momentum.
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