On Tuesday, KeyBanc began coverage on Array Technologies (NASDAQ: ARRY), assigning a Sector Weight rating to the stock. The firm noted that Array Technologies' shares have significantly lagged behind the index NEX and its closest competitor NXT over the past year, with a 26% and 113% underperformance respectively. This decline was attributed to an array of challenges that the company faced, including inconsistent earnings results, mixed commentary, and a generally negative sentiment following several issues in 2022.
These issues encompassed accounting problems, an equity raise, and changes in management. Consequently, Array Technologies is currently trading at a roughly five times discount to NXT, despite having a similar market share and being subject to the same market dynamics. The firm highlighted that these factors have led to a cautious stance on the stock's near-term prospects.
KeyBanc pointed out that despite Array Technologies' comparable market share to NXT and the similar end-market dynamics both companies face, the stock's valuation reflects a significant discount. This suggests that investors have priced in the concerns stemming from the company's recent troubles. The firm's initiation of coverage with a Sector Weight rating reflects a neutral outlook, indicating that the analyst does not foresee significant stock movement in either direction in the immediate future.
The firm's assessment is based on the belief that Array Technologies will likely continue to be affected by the repercussions of its previous challenges for some time. The recent commentary from the company and its outlook for 2024 suggest that recovery may be gradual. KeyBanc's stance indicates a wait-and-see approach, as the market continues to evaluate Array Technologies' ability to overcome its past issues and stabilize its performance.
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