On Monday, Jefferies made a revision to the stock price target for Array Technologies (NASDAQ: ARRY), reducing it to $8.00 from the previous $11.00. The firm continues to endorse the stock with a Buy rating, despite expressing increased caution about its near-term prospects. The revised price target reflects concerns over potential delays and a projected decrease in backlog additions.
The analyst from Jefferies indicated that the company might face further delays, which could impact the stock's performance in the third quarter. Despite these concerns, the firm holds onto its Buy rating but has reduced the price target to $8, citing the latest worries about limited backlog additions. The expectation is for a 50% drop in these additions.
For the third quarter, a slight outperformance in revenue is anticipated, with a forecast of a 2% increase over consensus estimates. The analyst suggests that managing the ongoing delays, especially after the election, will be crucial for Array Technologies' performance.
Following recent price cuts, the market's attention is also expected to shift towards backlog additions and Array Technologies' efforts to regain market share. The ability to handle these challenges effectively will be closely monitored by investors and industry observers alike. The company's strategy in dealing with these issues will be a key factor in its ability to maintain its market position.
In other recent news, Array Technologies reported Q2 earnings with revenue of $256 million, an adjusted gross margin of 35%, and an adjusted EBITDA of $55.4 million. However, the company revised its full-year 2024 guidance downward due to short-term project delays and other challenges. Truist Securities and Scotiabank both adjusted their outlooks on Array Technologies, reducing their price targets but maintaining positive ratings.
Array Technologies' Chief Legal Officer, Tyson Hottinger, announced his resignation, effective October 31, 2024. The company also launched a new incentive plan targeting long-term financial and operational goals for its executive officers, introducing performance-based stock units.
In its ongoing commitment to innovation and sustainability, Array Technologies introduced a reusable packaging solution to reduce waste and optimize supply chain efficiency in the utility-scale solar sector. The company also launched SkyLink, a product that simplifies cable management and installation. These recent developments reflect Array Technologies' ongoing commitment to the competitive solar energy industry.
InvestingPro Insights
Array Technologies' recent market performance aligns with Jefferies' cautious outlook. According to InvestingPro data, the company's stock has experienced significant declines, with a 61.13% drop over the past year and a 35.27% fall in the last three months. This downward trend supports the analyst's decision to lower the price target.
Despite these challenges, InvestingPro Tips highlight that Array Technologies operates with a moderate level of debt and its liquid assets exceed short-term obligations, which could provide some financial stability during this period of anticipated delays and reduced backlog additions. The company's profitability over the last twelve months, with a gross profit margin of 28.39%, suggests it has maintained some operational efficiency despite headwinds.
However, the InvestingPro data shows a concerning 38.88% revenue decline in the last twelve months, which corroborates the analyst's expectations of limited backlog additions. This trend may continue to pressure the company's performance in the near term.
For investors seeking a more comprehensive analysis, InvestingPro offers 12 additional tips for Array Technologies, providing a deeper understanding of the company's financial health and market position.
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