On Thursday, Piper Sandler adjusted its price target for Nextracker Inc (NASDAQ:NXT), reducing it to $64 from the previous $66, while sustaining an Overweight rating for the stock. The firm's analysis indicates that as Nextracker approaches its fiscal year-end in March, investors are likely to concentrate on the company's full-year guidance for Fiscal 2025.
Nextracker is anticipated to conclude Fiscal 2024 with a substantial backlog ranging between $3.7 and $4.1 billion, marking a year-on-year increase of 45-60%. This backlog is expected to be complemented by a value chain activity (VCA) mix in the mid-30s percentile. Unlike other companies in the utility-scale solar equipment sector that are experiencing stagnant or declining trends, Nextracker is projected to experience growth during Fiscal 2025.
However, the company might face growth constraints in the U.S. due to industry-wide bottlenecks, such as shortages in transformers and circuit breakers.
As a result, the firm predicts that Nextracker's growth will primarily be driven by its international business segment. Revenue forecasts for Fiscal 2025 have been adjusted to $2.80 billion, a slight decrease from the prior and street estimates of $2.85 billion and $2.88 billion, respectively.
In light of the company's third-quarter fiscal call and the expectation of tax credits, non-GAAP earnings per share (EPS) for Nextracker are projected at $3.78, an increase from the prior estimate of $3.65 and above the street's $3.09 forecast.
The key issues for Nextracker going forward involve order momentum during Fiscal 2025, particularly whether international growth can offset slower U.S. growth, the potential to maintain mid-20% gross margins excluding tax credits, and the preparedness of U.S. customers in securing necessary critical infrastructure equipment.
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