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On Friday, Jefferies analyst Julian Dumoulin-Smith updated the firm’s stance on Shoals Technologies Group (NASDAQ:SHLS), increasing the price target to $4.90 from the previous $3.90. The analyst maintained a Hold rating on the stock. According to InvestingPro data, the company, currently trading at $4.31 with a market cap of $720.52M, shows promising potential with 8 analysts recently revising their earnings estimates upward. Dumoulin-Smith highlighted the positive impact of the Foreign Exchange Operations Coverage (FEOC) language, which is seen as significantly reducing competitive risks for Shoals from Chinese suppliers. This development, coupled with tariffs, is expected to sway customers towards U.S.-based solutions.
The analyst also adjusted revenue estimates for 2025 and 2026, raising them by 5% and 8% to $448 million and $524 million, respectively. The revisions reflect the company’s strong positioning in the utility-scale solar market, which is deemed favorable in the current climate. InvestingPro analysis reveals the company maintains a healthy financial position with a strong current ratio of 2.34 and operates with moderate debt levels. For deeper insights into Shoals’ financial health and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers. The FEOC language and the tariffs are instrumental in this outlook, as they provide a competitive edge to domestic companies like Shoals.
Despite the price target increase and the current favorable conditions, the analyst expressed caution regarding long-term headwinds. These concerns include emerging competitors, such as NXT, expanding into the electrical balance of system (eBOS) business, which could challenge Shoals’ market share. Additionally, there is apprehension about slowing end markets due to the phaseout of the 48E tax credit, with a deceleration anticipated in 2027 and 2028.
The new price target of $4.90 reflects these mixed prospects, balancing the near-term advantages with the potential challenges on the horizon. The Hold rating suggests that while there are positive factors at play, investors should also be mindful of the risks that could affect Shoals Technologies’ performance in the longer term. InvestingPro analysis indicates the stock is currently undervalued, trading at a P/E ratio of 43.47, with additional insights available through 12+ exclusive ProTips covering various aspects of the company’s performance and potential.
In other recent news, Shoals Technologies Group reported its Q1 2025 earnings, revealing a revenue of $80.4 million, which exceeded the forecasted $74.76 million. Despite this revenue beat, the company experienced a net loss of $300,000. Shoals remains optimistic for the full year, projecting revenue between $410 million and $450 million. The company is also constructing a large manufacturing facility to boost capacity and continues to expand internationally, including a 12 gigawatt Memorandum of Understanding with UGT Renewables. Jefferies analyst Julian Dumoulin-Smith recently raised the price target for Shoals Technologies to $3.90, maintaining a Hold rating. This decision was influenced by Shoals’ strong first-quarter performance and advancements in international markets and Battery Energy Storage Systems. Shoals’ backlog demonstrated a 30% quarter-over-quarter growth, indicating a strengthening pipeline, although awarded orders saw a modest increase of 1.6%.
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