Oppenheimer has adjusted its outlook on Array Technologies (NASDAQ: ARRY), reducing the price target to $17 from $20, but kept an Outperform rating on the stock.
The firm's decision follows Array Technologies' recent financial update, which surpassed market expectations but also included revised guidance indicating challenges ahead.
The company reported project delays in the United States and Brazil, a dip in commodity prices, and $17 million in cancellations. These factors are expected to impact the stock's performance in the short term. Despite these headwinds, Array Technologies has been successful in generating robust cash flow, refining its operations, and advancing its product line.
Oppenheimer believes that Array Technologies' strategy to reduce debt remains on track. The market's response in aftermarket trading suggests a valuation of 7-8 times the company's estimated 2025 EBITDA for its operating company. In response to the updated financial forecasts, Oppenheimer has revised its estimates for the current and following year.
Nonetheless, Oppenheimer sees substantial unrecognized potential in Array Technologies' shares. This perspective is based on the limited number of project cancellations, a growing backlog across the industry to satisfy rising demand, and the company's sustained strong product offerings as it continues to meet customer requirements.
Meanwhile, Piper Sandler revised its price target for the company from $14.00 to $8.00, citing project delays in the United States and Brazil. The firm also expects Array Technologies to convert 80% of its current backlog by the end of 2025, contributing positively to the company's financial results.
Roth/MKM has downgraded Array Technologies from Buy to Neutral, highlighting risks of further project delays and a decrease in the overall backlog due to factors such as commodity price fluctuations and foreign exchange impacts.
However, Citi upgraded the company to 'Buy', anticipating a recovery of lost market share and a record backlog by 2024, despite a decrease in the price target to $14.00.
Array Technologies also reported Q1 revenue of $153 million, slightly above their high-end guidance, and adjusted gross margins of 38.3%. The company maintains its full-year revenue guidance of $1.25 billion to $1.4 billion. However, CFO Kurt Wood has resigned, raising investor concerns over his severance package and the pace of utility-scale solar deployments.
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