On Thursday, Piper Sandler adjusted its price target for FTC Solar Inc. (NASDAQ:FTCI), bringing it down to $0.50 from the previous $0.60, while maintaining a Neutral rating on the stock. The revision follows FTC Solar's fourth-quarter 2023 update, which presented a forecast significantly below market expectations.
FTC Solar had previously indicated on their third-quarter 2023 call that the fourth quarter would mark a low point, with a rebound to $40-50 million in revenues expected in the first quarter of 2024. However, the latest guidance for the first quarter of 2024 anticipates revenues to be between $10-15 million, representing a more than 70% shortfall from the initial guidance.
The firm highlighted concerns over the company's visibility into future performance, citing a 68% year-over-year drop in deferred revenues—customer deposits—to just $3.6 million, despite an increase in the backlog to $1.7 billion, which is up 42% year-over-year. Of this backlog, $450 million is contracted, but the low ratio of deferred revenues to contracted backlog, which stands at 1%, is notably smaller compared to peers, indicating limited visibility for 2024.
Piper Sandler anticipates an 8% decline in FTC Solar's revenues for the current year, which implies a greater than 20% miss compared to Street expectations.
Despite the forecast of continued significant misses versus expectations, the Neutral rating stands, as the stock price hovers around the $0.50 mark, which Piper Sandler believes already accounts for the ongoing challenges faced by the company. The new price target is based on the year-end 2023 tangible book value.
InvestingPro Insights
In light of Piper Sandler's revised price target for FTC Solar Inc. (NASDAQ:FTCI), it's worth noting some additional InvestingPro Insights that could further inform investors. FTC Solar's market capitalization stands at a modest $64.06 million, reflecting the challenges the company faces in the market. The company's P/E ratio, at -1.35 when adjusted for the last twelve months as of Q4 2023, underscores the lack of profitability in the recent period. Moreover, the company's revenue growth has been mixed, with a slight increase of 3.2% over the last twelve months, yet a quarterly decline of 11.51% in Q4 2023.
Two InvestingPro Tips that are particularly relevant to FTC Solar's current situation include the fact that the company holds more cash than debt, which could provide some financial flexibility, and that liquid assets exceed short-term obligations, suggesting a degree of short-term financial stability. However, it is important to note that analysts have a bearish outlook, with revisions to earnings pointing downwards for the upcoming period, and they do not expect the company to be profitable this year. Moreover, the stock has experienced significant volatility and a steep decline in price over the past year, which aligns with the concerns raised by Piper Sandler.
For investors seeking a deeper dive into FTC Solar's financial health and future prospects, InvestingPro offers additional tips and insights. There are 14 more InvestingPro Tips available, which can be accessed at https://www.investing.com/pro/FTCI. To benefit from these insights, readers can use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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