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UBS changed its rating on the company from a buy to neutral, which means the firm no longer expects the stock to outperform the broader market. The analysts also set a new price target of $5, down from where it was previously. While this is still above the current price of $4.06, the move reflects a more cautious view of the company's near-term path.
This shift is notable because it comes from a major firm that many other investors follow. It suggests that analysts are becoming less confident in how quickly the company can turn its $2 billion backlog of signed orders into actual revenue. If more firms follow suit, it could signal that the recovery we expect for these solar projects is further away than originally thought.
Source: UBS
Wall Street is bracing for a high probability that the Federal Reserve will raise interest rates on Wednesday. This matters for Array because its customers build massive utility-scale solar farms that require hundreds of millions of dollars in upfront financing. When borrowing costs go up, some of these projects can become too expensive to build or get delayed as developers look for new funding.
Array already has a large backlog of signed orders, but higher rates make it harder for those projects to actually break ground. Since the company only earns revenue when it ships hardware to active construction sites, a new cycle of rate hikes could slow down the recovery we are looking for in the business.
Array Technologies opened a new manufacturing facility in Albuquerque, New Mexico, following a investment of more than 50 million dollars. The plant will produce the mechanical systems that tilt solar panels to follow the sun, which is the company's core product for large-scale solar farms.
This move is part of a plan to build more equipment inside the United States. Making products domestically allows the company's customers to qualify for higher federal tax credits, which makes Array's hardware more attractive than imported rivals. For long-term owners, this is a key step in seeing if the company can turn its large backlog of signed orders into actual profit.
Source: GlobeNewsWire
Array Technologies has finalized its purchase of Affordable Wire Management, a firm that makes the specialized cabling and protection systems used in large solar farms. These components are part of the balance-of-system, which refers to all the supporting equipment in a solar project besides the panels themselves.
This move helps the company sell more than just the mechanical trackers that move panels. By owning the wiring and cable management side, Array can offer a more complete package to developers. For long-term owners, this is a step toward making the company a one-stop shop for solar hardware, which could help it win larger contracts and protect its margins against rivals.
Source: GlobeNewsWire
Deutsche Bank lowered its price target for the solar hardware maker from $8.90 to $7.50. This follows a period where the company has faced delays in getting large-scale solar projects started, which has weighed on its stock price. Even with the lower target, the firm's outlook remains well above the current price of about $4.57. Other analysts have a similar view, with the average target across all firms sitting at roughly $9.00. For long-term owners, this suggests that while the path to growth is taking longer than expected, analysts still believe the company's $2 billion backlog of signed orders will eventually turn into revenue.
Source: Deutsche Bank
Management has a history of setting conservative targets and clearing them, though recent results show the business is still working through a stretch of shrinking sales.
| Expectation | |
|---|---|
| EPS | $0.11 |
| Revenue | $329M |
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