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Investing.com --Array Technologies shares were downgraded by Bank of America to Underperform on mounting tariff risks and weaker profit margins.
The brokerage cut its price objective on solar tracker maker to $7 from $8, saying higher import duties on components from India and Mexico are set to add incremental costs not fully captured in the company’s guidance.
Management had assumed about 100 basis points of tariff drag for fiscal 2025, but BofA warned that the hit could be larger, undermining the company’s gross margin target of 28–29%.
BofA now forecasts structural margins closer to 27% through 2027, with further pressure from the way incentives under the U.S. Inflation Reduction Act are shared between suppliers and customers.
The analysts also flagged that Array’s steel pass-throughs are proving less effective than modeled, with customers retaining part of the tax credits.
Shares of Array have surged nearly 50% over the past month on optimism that developers would accelerate purchases to lock in incentives. But BofA said those gains may prove overdone, noting that transformer supply constraints, not trackers, are more likely to drive near-term pull-forward.
With the stock trading at a premium to peers such as Nextracker, the bank said risk now tilts to the downside.
“We see increased near-term risks around Array’s gross margins, and limited near-term upside via safe harboring pull-forward or a recovery in Brazil outside of the APA acquisition integration,” analysts wrote.