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On Monday, Piper Sandler made adjustments to its financial outlook for Nextracker Inc (NASDAQ:NXT), reducing the price target to $49.00 from the previous $50.00, while continuing to endorse the stock with an Overweight rating. Currently trading at $38.81, InvestingPro analysis suggests the stock is undervalued, with strong financial metrics including a P/E ratio of 13.57. The firm’s analyst cited ongoing uncertainties as the reason for the modification in expectations, leading to a conservative approach in revenue and EBITDA forecasts.
Nextracker, which has been working towards a more localized supply chain, is anticipated to face reduced direct risks from tariffs, according to Piper Sandler. The company’s strong financial position, evidenced by a healthy current ratio of 2.2 and minimal debt-to-capital ratio of 0.02, suggests it’s well-positioned to handle supply chain adjustments. The analyst expects that the company will be able to pass on the increased costs of steel to its customers. With the upcoming earnings update due on May 14, the focus is expected to be on the impact of tariffs, annual backlog figures, and the F26 guidance (12ME 03/31/26).
Despite the current market uncertainties, the analyst predicts that Nextracker will report a backlog of approximately $5.0 billion, up from over $4.0 billion the previous year. However, due to the uncertain environment, guidance for the U.S. business may be conservative. Consequently, Piper Sandler has lowered its revenue and EBITDA expectations by 5% and 6%, respectively, placing these projections 2% below the consensus on Wall Street.
Looking ahead, the firm anticipates that Nextracker could maintain a 75% EBITDA conversion ratio, potentially allowing the company to accumulate about 25% of its enterprise value in cash by the fourth quarter of fiscal year 2026. Updates from the company’s Foundations business are also among the key points of interest, as they could contribute to future upside.
In summary, Piper Sandler reaffirms its positive stance on Nextracker, considering it a strong candidate within the current volatile market conditions, despite the slight decrease in the price target to $49 per share.
In other recent news, Nextracker Inc. has been the focus of several analyst upgrades and financial developments. Guggenheim raised its price target for Nextracker to $62, maintaining a Buy rating, following the company’s impressive December quarter earnings that exceeded expectations in cost reduction and margin improvement. Mizuho (NYSE:MFG) Securities also increased its price target from $46 to $51, upholding an Outperform rating, after Nextracker’s revenue and gross margin surpassed projections, leading to an upgraded profit forecast for fiscal year 2025. Similarly, BMO Capital Markets lifted its price target to $50, acknowledging Nextracker’s raised earnings guidance for FY 2025 and a strong backlog supporting growth into 2026, although it retained a Market Perform rating.
RBC Capital Markets initiated coverage with an Outperform rating and a $55 price target, citing Nextracker’s operational improvements and innovative product designs as factors contributing to its competitive market position. In financial maneuvers, Nextracker amended its credit agreement to allow greater flexibility in Surety Bonds, ensuring enhanced operational leeway. The company also fully repaid all outstanding obligations under its term loan, a move expected to provide better management of its debt instruments. These recent developments highlight Nextracker’s continued growth and strategic financial management in the renewable energy sector.
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