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Investing.com -- Nextracker Inc. was upgraded by both Barclays (LON:BARC) and Jefferies on Wednesday, as analysts expressed renewed confidence in the company’s execution, margin profile, and growth potential.
Jefferies upgraded Nextracker to Buy, raising its price target to $56, citing strong margins and record bookings.
The firm had previously been concerned about a slowing U.S. market and potential margin compression from international expansion.
However, they said Nextracker’s ability to maintain a ~36% gross margin, despite increasing international exposure, eased those worries.
“We raise our EBITDA estimates by ~32% for FY26/’27, largely driven by margin upside,” Jefferies noted.
The firm also highlighted a record backlog, now "significantly above" $4.5 billion, with strong demand in both U.S. and international markets.
Additionally, Jefferies pointed to a potential share buyback program once spin-off restrictions from Flex (NASDAQ:FLEX) end in 2025, estimating $1.2 billion in cash on hand by then.
Barclays also upgraded Nextracker, moving it to Overweight from Equal Weight, raising its price target to $60 from $47.
The firm expects the company to hit or exceed the upper end of all FY25 guidance metrics and sees Nextracker trading at a discount to ARRY, despite stronger execution.
Barclays now estimates FY26 revenue of $3.2 billion and adjusted EBITDA of $704 million, both above consensus. The firm also emphasized Nextracker’s backlog of ~$5 billion, with 87% expected to convert to revenue over the next eight quarters.