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On Tuesday, Jefferies analyst Julian Dumoulin-Smith adjusted the price target on Shoals Technologies Group (NASDAQ:SHLS) shares, decreasing it to $3.40 from the previous $4.60. Despite this change, the firm maintained its Hold rating on the stock. The adjustment comes as the stock trades near its 52-week low of $2.77, having declined 78% over the past year. According to InvestingPro data, 12 analysts have recently revised their earnings estimates downward, with current price targets ranging from $4 to $10.50. Dumoulin-Smith pointed out that the near-term (NT) outlook for the company appears mixed. The analyst noted that while the backlog has secured a larger portion of the company’s guidance, there is a decline in the 2024 backlog, along with the risk of additional project pushouts. These factors could potentially impact the company’s revenue.
The analyst highlighted concerns about the second half of the year being back-half weighted, which might exacerbate the top-line pressure for Shoals Technologies. The company, currently valued at $471 million, generated revenue of $399 million in the last twelve months. Despite these challenges, there is still a recognition of potential growth opportunities in international markets, commercial and industrial sectors, and battery energy storage systems (BESS).
Dumoulin-Smith also acknowledged the competitive landscape, particularly noting the threat posed by larger domestic peers such as Primoris (PRIM). The decision to lower the price target to $3.40 is a reflection of the revised estimates that take into account the potential headwinds and the competitive environment.
Shoals Technologies Group specializes in electrical balance of system (EBOS) solutions for solar energy projects. The company’s products include combiner boxes, junction boxes, wiring, and monitoring systems, which are essential for the operation of solar energy installations.
The update from Jefferies comes as investors and stakeholders in the solar energy sector monitor the performance and prospects of companies like Shoals Technologies, especially in the context of an increasingly competitive and dynamic market.
In other recent news, Shoals Technologies Group reported its fourth-quarter earnings, revealing adjusted earnings per share of $0.08, which fell short of analyst expectations by $0.01. However, the company’s revenue of $107 million surpassed the anticipated $101.98 million, despite marking an 18% decline from the previous year. The company also provided guidance for 2025 that disappointed Wall Street, projecting first-quarter revenue between $70-80 million, significantly below the consensus estimate of $109.04 million. For the entire year, Shoals forecasts revenue of $410-450 million, compared to analyst expectations of $443.2 million. CEO Brandon Moss cited disruptions in the U.S. utility-scale solar market, including political changes and supply chain challenges, as reasons for the cautious outlook. Despite these challenges, Shoals ended the fourth quarter with a backlog and awarded orders totaling $634.7 million, a 6.5% increase from the previous quarter. Additionally, Oppenheimer analyst Colin Rusch maintained an Outperform rating with a $10.00 price target, noting the backlog growth as a positive sign. Meanwhile, Jefferies analyst Julian Dumoulin-Smith adjusted Shoals’ price target to $4.60 from $5.20, maintaining a Hold rating due to a mixed near-term outlook.
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