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On Monday, RBC Capital Markets began coverage of Array Technologies (NASDAQ:ARRY), a leader in solar tracking solutions, assigning a "Sector Perform" rating and establishing a price target of $7.00. The company, currently valued at $924 million, has seen its stock decline nearly 50% over the past year. According to InvestingPro analysis, Array Technologies appears undervalued based on its Fair Value assessment. The new coverage reflects recognition of the company’s recent product innovations, which analysts believe are influencing demand positively and enhancing Array Technologies’ competitive edge in challenging terrains and uniquely shaped site locations.
The company’s ability to address previous limitations in site adaptability has been noted as a potential driver for regaining market share. Analysts at RBC Capital acknowledged these advancements, suggesting they could create a persuasive narrative for Array Technologies to reclaim its position in the market. InvestingPro data shows the company maintains a healthy current ratio of 2.28, with liquid assets exceeding short-term obligations, suggesting financial flexibility to support its growth initiatives.
Despite the optimism surrounding the company’s technological progress, RBC Capital’s analysts are adopting a cautious stance. They have expressed a desire to observe additional evidence of growing order flow before adopting a more bullish outlook on the company’s stock. This wait-and-see approach indicates that while the firm acknowledges Array Technologies’ potential, it is not yet ready to fully endorse a stronger investment rating.
Array Technologies’ innovations over the past years include solutions that allow solar tracking systems to be deployed on uneven ground and non-rectangular sites, addressing a key concern that was previously identified through channel checks. This development has been seen as a significant step forward for the company, potentially opening up new opportunities in the market.
The "Sector Perform" rating suggests that RBC Capital Markets believes Array Technologies’ stock will perform in line with the expectations for the sector as a whole. The $7.00 price target is indicative of the firm’s valuation of the company based on the current information available. Notably, analyst targets range from $6 to $13, with consensus expecting profitability this year despite recent challenges. For deeper insights into Array Technologies’ potential, including 10 key ProTips and comprehensive valuation metrics, investors can access the full analysis through InvestingPro’s detailed research report.
In other recent news, Array Technologies reported its fourth-quarter earnings for 2024, revealing a slight miss on earnings per share (EPS) compared to market expectations. The EPS came in at $0.16, falling short of the forecasted $0.18, while revenue for the quarter was $275.2 million, slightly exceeding projections. Despite the revenue beat, the company’s stock reacted negatively, reflecting investor concerns over the EPS miss and a significant year-over-year revenue decline. Barclays (LON:BARC), Mizuho (NYSE:MFG) Securities, and Seaport Global Securities have all adjusted their outlooks on Array Technologies, with Barclays lowering its price target from $9.00 to $8.00 and maintaining an Overweight rating, while Mizuho cut its target to $9.00 from $11.00, keeping a Neutral stance. Seaport Global Securities downgraded the stock from Buy to Neutral, citing competitive challenges and market conditions in Brazil. Array Technologies provided guidance for 2025, projecting 20% revenue growth, but noted weaker than expected top-line growth and EBITDA margin due to ongoing challenges in Brazil. The company’s strategic focus on domestic content and product innovation is expected to drive growth, as it aims to deliver 100% domestic content trackers by the first half of 2025. Investors will be closely watching how Array Technologies navigates these challenges and whether it can leverage its strategies to improve performance.
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