On Thursday, FTC Solar Inc. (NASDAQ:FTCI) experienced a significant adjustment in its stock outlook as an analyst at Roth/MKM changed the company's rating from Buy to Neutral. Accompanying this downgrade, the price target for FTC Solar's shares was also reduced to $0.45 from the previous $2.00.
The revision comes amid concerns about the solar company's ability to reach the necessary revenue threshold for profitability. Roth/MKM's report highlighted that while FTC Solar's management has previously outlined strategies to achieve profitability, these plans have seen limited success. The report states, "We downgrade FTCI to Neutral with a 45c PT from $2 until we can truly see a path to the $50-60mn of revenue required for break-even and beyond."
The analyst also expressed concerns regarding the company's financial stability, suggesting that cash flow could become problematic if FTC Solar does not reach its break-even point as quickly as anticipated. This has led to a conservative approach in the firm's estimates, with the forecast for FTC Solar to approach break-even being pushed back to the second half of 2025, as opposed to the previously expected second half of 2024.
The downgrade reflects a cautious stance towards FTC Solar's future performance, emphasizing that the company must demonstrate its ability to execute its profitability plan effectively. The report concludes with the notion that FTC Solar is now considered a "show me" story, indicating that evidence of progress will be crucial for any future positive reassessment of the company's stock.
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