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On Tuesday, TD Cowen adjusted its outlook on FTC Solar Inc. (NASDAQ:FTCI), a solar tracking solutions provider, by slashing its price target by 50%. The new target stands at $5.00, down from the previous $10.00, while the firm maintained a Buy rating on the stock. The adjustment follows FTC Solar’s report of strong sequential revenue growth and an increase in its contracted backlog. According to InvestingPro data, the stock is currently trading at $2.69, down over 51% in the past six months, though analysis suggests the stock may be undervalued at current levels.
Jeffrey Osborne, an analyst at TD Cowen, expressed increased confidence in FTC Solar’s ongoing transformation, despite noting that the company’s profit margins are currently compressed due to its lack of scale. Osborne highlighted that the company’s management has reaffirmed its goal to reach breakeven adjusted EBITDA by 2025, which is expected to be driven by project execution in the second half of the year.
FTC Solar’s commitment to cost control and readiness for domestic content were cited as supportive factors for the company’s long-term prospects. However, Osborne pointed out that, in the near term, there is limited visibility on the company’s margins. This uncertainty seems to stem from the challenges of scaling operations and the competitive landscape in the solar industry. InvestingPro has identified several key challenges, including rapid cash burn and weak financial health scores. Subscribers can access 12 additional ProTips and a comprehensive Pro Research Report for deeper insights into FTCI’s financial position.
The firm’s analysis suggests that while FTC Solar is on a positive trajectory with its order book and revenue, investors may need to be patient as the company works towards its financial targets. The lowered price target reflects a cautious optimism, acknowledging the hurdles the company faces in the immediate future while endorsing its overall strategy and market position.
FTC Solar’s stock performance will continue to be watched closely by investors as the company pursues its strategic goals and navigates the operational challenges ahead. The market’s reaction to TD Cowen’s revised price target and commentary may influence the stock’s movement in the near term.
In other recent news, FTC Solar Inc. reported a significant revenue decline of 43.1% year-over-year for Q4 2024, with revenue reaching $13.2 million. The company’s earnings per share fell short of expectations, contributing to a mixed market reaction despite exceeding revenue forecasts. FTC Solar’s GAAP net loss for the quarter was $12.2 million, or $0.96 per diluted share. Looking ahead, the company projects Q1 2025 revenue between $18 million and $20 million, indicating a potential 44% sequential growth. FTC Solar aims to achieve adjusted EBITDA breakeven in 2025, supported by strategic initiatives and new product launches like the 1P Pioneer Tracker. The company has also secured a five-year, five-gigawatt supply agreement with Recurrent Energy, spanning projects in the U.S., Europe, and Australia. Additionally, FTC Solar announced new project awards, including a 333-megawatt project in Australia and a 280-megawatt project on the U.S. West Coast. Analyst firms such as Roth Capital Partners (WA:CPAP) and TD Cowen noted the company’s strong bookings momentum and strategic focus on expanding its market presence.
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