Shares of Array Technologies (ARRY) increased by over 30% in the last three months, significantly outperforming the market.
Despite its rally, I believe this stock has upside potential that the market has not recognized completely, making the purchase worth the price. Thus, I am bullish on this stock. (See Analysts’ Top Stocks on TipRanks)
Based in Albuquerque, New Mexico, Array Technologies manufactures solar tracking systems, helping solar energy companies place their solar energy projects on the right ground.
Array’s technology can also establish the optimal exposure to the sun’s rays in real-time. This is possible thanks to machine learning software that the company provides to its customers working on utility-scale projects in the United States, and overseas.
Q2 Earnings Recap
Second-quarter results have improved by a large amount year-over-year because of an increase in demand for Array’s products.
Total revenue of $202.8 million was below projections by about $21 million, but grew dramatically on a year-over-year basis, by 76.5%.
Turnover growth was so important that the second-quarter adjusted EPS of $0.07 managed to outperform analyst estimates by $0.04. This is despite the ongoing headwinds for higher input and logistics costs.
Growth Catalysts
The United States and China, the largest and second-largest economies in the world, will influence the long-term perspectives of the solar industry.
The Biden administration’s multibillion-dollar package on public infrastructure should include a 10-year extension to federal tax credits on investments in solar power projects.
China plans to cover extended areas of the country’s desert regions with hundreds of gigawatts from solar and wind power.
Many investors pin their hopes on lower module prices as these will likely unlock most of the pent-up demand, giving a strong impetus to photovoltaic installations and the sales for providers of solar tracker systems.
Array recently appointed the experienced executive Ken Stacherski as its COO. It also reached a strategic agreement with the South Korean steel company POSCO (PKX) for solar projects on the West Coast of the United States.
Following these developments, Array Technologies should be prepared to cope with supply chain challenges and high inflationary pressures.
Wall Street’s Take
In the past three months, six Wall Street analysts have issued a 12-month price target for ARRY.
The average Array Technologies price target is $20.20, implying 6.2% upside. The consensus rating is a Hold, based on one Buy, four Holds, and one Sell rating.
Summary
The solar industry is poised to create a strong tailwind while the company is on track to improve margins.
Disclosure: At the time of publication, Alberto Abaterusso did not have a position in any of the securities mentioned in this article.
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