On Monday, Piper Sandler adjusted its price target for FTC Solar Inc. (NASDAQ:FTCI), a solar tracking solutions provider, to $0.40 from the previous $0.40, while keeping a Neutral rating on the stock.
This change comes in the wake of FTC Solar's first-quarter revenue matching consensus estimates but falling short of second-quarter forecasts.
FTC Solar's first-quarter report revealed an organic free cash flow (FCF) deficit of $12.3 million. The company ended the quarter with $16 million in cash and collected an additional $9 million after the quarter's close. FTC Solar also has $65.9 million available under its at-the-market (ATM) offering, has eliminated its credit facility, but faces the risk of being delisted from the Nasdaq by June 19, 2024, if it does not meet listing requirements.
Despite the financial challenges, FTC Solar reported growth in its contracted backlog, which increased to $485 million from $415 million in the previous quarter.
The company also saw a quarter-over-quarter increase in deferred revenues, rising by $1.3 million to $4.9 million. However, the ratio of deferred revenues to the backlog is still considered low compared to industry peers.
FTC Solar remains optimistic about its financial outlook, expecting to reach corporate profitability by the third quarter and to become profitable in the fourth quarter of 2024.
The company has been focusing on projects that have reduced risks associated with equipment and permitting. FTC Solar also noted that due to its low stock price, most of its customers are not tier-1 solar companies.
The revised price target of $0.40 per share is based on the company's tangible book value (TBV) for the first quarter. Piper Sandler's decision to maintain a Neutral rating reflects the ongoing stock volatility experienced by FTC Solar.
InvestingPro Insights
FTC Solar Inc.'s current financial position and market performance reveal several key factors that investors should consider. With a market capitalization of $61.96 million, the company's valuation metrics indicate significant challenges. The negative P/E ratio of -1.25, adjusted to -1.3 for the last twelve months as of Q1 2024, underscores the company's lack of profitability during this period. This is further reflected in the substantial revenue decline of -13.73% over the last twelve months, with a staggering quarterly drop of -69.22% in Q1 2024.
The company's gross profit margin stands at a meager 4.47%, highlighting efficiency issues in converting sales into actual profit. This is consistent with one of the InvestingPro Tips, which points out FTC Solar's weak gross profit margins. Moreover, the stock's price volatility is evident from its -84.98% total return over the past year, aligning with another tip that notes the stock's high price volatility and significant price drop over multiple time frames.
Despite these challenges, FTC Solar has some liquidity strengths. The company holds more cash than debt on its balance sheet and its liquid assets exceed short-term obligations. This financial cushion could provide some stability as the company navigates its path to profitability. For investors seeking a deeper analysis, there are additional InvestingPro Tips available, which can be accessed by visiting https://www.investing.com/pro/FTCI. Remember to use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, which includes even more comprehensive tips and metrics to guide your investment decisions.
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