Roth/MKM upgrades Shoals Technologies stock to Buy on strong Q2 results

Investing.com - Roth/MKM has upgraded Shoals Technologies Group (NASDAQ:SHLS) from Neutral to Buy, while raising its price target to $10.00 from $5.00 following the company’s strong second-quarter performance. According to InvestingPro data, the stock currently trades at a P/E ratio of 39x, with analysts’ targets ranging from $4.00 to $11.00.

The solar equipment manufacturer delivered better-than-expected Q2 results and raised its 2025 revenue guidance, demonstrating robust bookings and backlog growth despite recent market challenges in the solar sector. The company maintains healthy financials with a current ratio of 2.34x and operates with moderate debt levels.

Roth/MKM views the negative market reaction to Shoals’ strong quarterly report as a buying opportunity, citing the company’s premium product offerings and dominant market position with over 50% market share.

While Shoals is currently growing revenue partly through lower-margin product offerings, the research firm expects the company to eventually return to its long-term margin targets as market conditions improve.

The firm considers the post-earnings sell-off an attractive entry point, with shares trading at approximately 6x 2026 EBITDA, suggesting many negative catalysts have already been priced into the stock.

In other recent news, Shoals Technologies Group reported its second-quarter 2025 earnings, surpassing analysts’ expectations with an earnings per share (EPS) of $0.10, compared to the forecasted $0.08. The company’s revenue reached $110.8 million, exceeding the anticipated $104.77 million. Following this strong performance, Shoals Technologies increased its full-year 2025 revenue guidance by 7% at the midpoint, while maintaining its original adjusted EBITDA guidance for the year. Analysts at UBS responded by lowering their price target for the company to $7.00 from $7.50, although they maintained a Buy rating. Similarly, Jefferies also reduced their price target to $6.00 from $7.20, while keeping a Buy rating. These adjustments come despite Shoals Technologies’ robust earnings report and increased revenue outlook for fiscal year 2025.

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