On Wednesday, UBS maintained its Neutral stance on FTC Solar Inc. (NASDAQ:FTCI) stock, keeping the price target fixed at $0.50.
The decision follows the company's first-quarter results for 2024, which aligned with market projections, and its second-quarter guidance, which fell short of expectations.
The firm has revised its adjusted EBITDA forecasts for 2024 to 2026 to negative $24 million, $7 million, and $31 million, respectively, a change from the previous projections of negative $20 million, $16 million, and $35 million.
This adjustment reflects the anticipated slower revenue increase due to FTC Solar's potential operational improvements.
The updated adjusted EBITDA expectations have consequently affected the adjusted earnings per share (EPS) estimates. Despite these changes, UBS continues to express cautious optimism regarding FTC Solar's ability to effectively leverage its $1.8 billion backlog in the medium term.
The current forecast suggests that FTC Solar will convert approximately 10% of its backlog into revenue over the next twelve months, a rate significantly lower than the roughly 70% conversion rates seen by its industry peers NXT and ARRY.
FTC Solar's management has indicated that it expects to reach adjusted EBITDA profitability by the fourth quarter of 2024. This milestone is viewed as a potential indicator of the success of recent management changes and the company's strategic direction.
InvestingPro Insights
Amid the cautious outlook presented by UBS on FTC Solar Inc. (NASDAQ:FTCI), real-time data and InvestingPro Tips offer additional context for investors monitoring the company's performance. With a market capitalization of $59.46 million, FTC Solar's financial health is marked by a negative P/E ratio of -1.23, reflecting challenges in profitability. The company's revenue has contracted by 13.73% over the last twelve months as of Q1 2024, highlighting the headwinds faced in generating sales growth.
InvestingPro Tips indicate that FTC Solar holds more cash than debt on its balance sheet, which could provide some financial flexibility in the short term. However, analysts have revised their earnings downwards for the upcoming period, suggesting that the market anticipates further challenges ahead. Notably, the stock's price volatility remains high, which could present both risks and opportunities for traders. For investors seeking more comprehensive analysis, there are additional InvestingPro Tips available, offering deeper insights into FTC Solar's prospects. To explore these further, consider using coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
Despite the recent strong return over the last month, with a 20.22% price total return, the longer-term picture shows a significant decline, with a one-year price total return of -86.04%. This stark contrast underscores the importance of closely monitoring both short-term performance and long-term trends when evaluating investment decisions in volatile stocks like FTC Solar.
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