Array Technologies Faces Revenue Outlook Concerns Post Citi’s Price Target Revision
Citi’s Price Target Revision and Neutral Stance
Citi recently adjusted its price target for Array Technologies (NASDAQ:ARRY) to $16 from $16.50, maintaining a Neutral stance on the stock. This decision followed Array Technologies’ fourth-quarter earnings report for 2023, which closely aligned with estimates, excluding the Investment Tax Credit (ITC) benefit.
Challenges in Revenue and Margins
While Array Technologies exceeded revenue expectations for the quarter, challenges in reduced margins and higher operational expenditures emerged. The company’s fiscal year 2024 forecast fell short of analyst predictions, with revenue and earnings per share (EPS) projections missing by approximately 29% and 13%, respectively.
Growth Prospects and Market Sentiment
Despite these challenges, Array Technologies anticipates a gross margin in the low-30s percentage range for 2024, boosted by around $40 million in ITC benefits recognized in 2023. The company has seen a triple increase in its order pipeline, higher win rates, and a book-to-bill ratio of 1.7 times in Q4 2023, attributed to lower pricing achieved through cost improvements.
Market Outlook and Investor Sentiment
Citi forecasts a potential slight decline in Array Technologies’ stock, influenced by weaker revenue outlook, skewed results towards the second half of the year, and investor tendencies to overlook the 2023 ITC benefit when evaluating 2024 prospects. However, concerns are somewhat mitigated by the growth in the company’s backlog and prevailing negative market sentiment before the earnings report.
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