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Investing.com - H.C. Wainwright reduced its price target on Orion Energy Systems (NASDAQ:OESX) stock to $2.00 from $3.00 on Friday, while maintaining a Buy rating on the energy-efficient lighting and EV charging solutions provider. The stock, currently trading at $0.68 with a market cap of $22.41 million, has shown resilience with a 15.63% gain over the past week, according to InvestingPro data.
The price target reduction follows Orion’s weaker-than-expected revenue outlook for fiscal year 2026, with the company projecting annual revenue of $84.0 million, representing approximately 5% year-over-year growth. This forecast falls below H.C. Wainwright’s previous expectation of $94.1 million. InvestingPro analysis reveals the company is currently unprofitable, with a negative EBITDA of $3.24 million in the last twelve months.
Orion management attributed the lower guidance to flat or negative growth expected in its EV charging business, combined with only modest growth in LED lighting and maintenance revenues. The research firm subsequently adjusted its FY2026 revenue expectation to $83.8 million and now projects operating and net losses of $6.9 million and $8.5 million, respectively.
Despite near-term challenges, H.C. Wainwright noted that Orion has reduced its annual operating overhead by more than $4 million over recent quarters, leading to improved gross margins and lower operating costs. The firm projects gross margins to improve to 27.3% in FY2026, compared to 25.4% in FY2025. According to InvestingPro, the company maintains a moderate debt level with a debt-to-equity ratio of 0.77, while its Fair Value analysis suggests the stock may be undervalued at current levels. Subscribers can access 5 additional ProTips and a comprehensive Pro Research Report for deeper insights into OESX’s financial health and growth potential.
The research firm highlighted that Orion’s products are Build America Act compliant, potentially positioning the company to benefit from the current federal administration’s focus on American manufacturing, despite not currently receiving tailwinds from the National Electric Vehicle Infrastructure program. With a beta of 1.23, the stock shows moderate market sensitivity, which could be significant as the company pursues these growth opportunities.
In other recent news, Orion Energy Systems reported its fourth-quarter fiscal year 2025 earnings, revealing a decrease in revenue to $20.9 million from $26.4 million in the same quarter the previous year. The company posted a net loss of $0.09 per share, missing analyst expectations of a $0.05 loss per share. Despite these results, Orion managed to generate positive cash flow from operations amounting to $600,000, a significant turnaround from a negative $10.1 million in the previous fiscal year. The company has also reduced its revolver borrowings to $7 million. Looking ahead, Orion forecasts FY2026 revenue of $84 million, representing a 5% growth. The company anticipates modest growth in LED lighting and electrical maintenance revenues, though EV charging revenues are expected to be flat to slightly lower. Orion aims for positive adjusted EBITDA in FY2026, with plans for more evenly distributed quarterly revenues compared to previous years. Additionally, Orion Energy Systems has reorganized its company into two commercial business units, Solutions and Partners, to better capitalize on its strengths and enhance its market position.
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