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On Wednesday, H.C. Wainwright adjusted its price target for Tigo Energy (NASDAQ:TYGO), a solar company, reducing it to $3.00 from the previous $5.00, while maintaining a Buy rating on the stock.
The revision reflects a recalibration of future financial expectations following the company's second-quarter earnings call, where management provided a more conservative revenue forecast for the third quarter of 2024.
Tigo Energy is now expected to generate revenues between $13 million and $16 million in the third quarter, a decrease from the analyst's earlier projection of $25.5 million.
Additionally, the company anticipates an adjusted EBITDA loss ranging from $6.5 million to $8.5 million for the same period, which is significantly higher than the previously estimated loss of $1.1 million.
Despite these downward revisions, the company is showing signs of sequential improvement in its financial performance. However, the analyst believes that initial expectations for a business recovery in the second half of 2024 were overly optimistic.
The solar industry's anticipated rebound is now likely to be delayed until early 2025, as market conditions, though gradually improving, continue to pose challenges.
Tigo Energy's management has indicated that with current inventory levels, the company would reach a break-even point on a cash basis with quarterly revenues of $17-19 million and adjusted EBITDA of $33-35 million.
The firm remains hopeful for Tigo Energy's capability to achieve sequential revenue growth throughout 2024 and into 2025, albeit at a slower rate than previously expected.
The company has recently launched its TS4-X product, which is already contributing to revenues and is not expected to impact sales of other portfolio items negatively.
Moreover, Tigo Energy has secured a significant contract for a 142MWp solar installation project in Spain, one of the largest projects to use Module Level Power Electronics (MLPE). The project is slated for completion by the end of this year.
According to H.C. Wainwright, Tigo Energy's balance sheet is considered stable enough to support the company's near-term operational requirements.
InvestingPro Insights
As Tigo Energy (NASDAQ:TYGO) navigates a challenging period, with H.C. Wainwright adjusting its price target, real-time data from InvestingPro provides additional context for investors. The market capitalization of Tigo Energy stands at $86.93 million, reflecting the company's size and market value. The P/E ratio, a measure of a company's current share price relative to its per-share earnings, is currently negative at -4.51, indicating that the company is not profitable at this time. This is further emphasized by a negative adjusted P/E ratio over the last twelve months as of Q1 2024, which sits at -6.65.
Revenue figures also show a decline, with a -13.57% change over the last twelve months as of Q1 2024, indicating that the company is facing a downturn in sales. This is consistent with the analyst's expectations of a sales decline in the current year, as mentioned in one of the InvestingPro Tips. Despite the revenue challenges, Tigo Energy's gross profit margin remains at 34.01%, suggesting that the company is maintaining a level of profitability in its core operations.
From the perspective of InvestingPro Tips, it's notable that two analysts have revised their earnings upwards for the upcoming period, providing a glimmer of hope for potential improvement in the company's financial outlook. Additionally, while the stock has experienced high price volatility, recent data shows a strong return over the last three months with a 27.43% price total return, which could be of interest to investors looking for short-term gains.
For those seeking a more comprehensive analysis, there are 15 additional InvestingPro Tips available for Tigo Energy, which can be accessed for further guidance on the company's performance and investment potential.
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