Tuesday, Northland resumed coverage on Nextracker Inc (NASDAQ:NXT), bestowing an Outperform rating on the solar tracking company's shares, accompanied by a price target of $48.00. The firm's analyst highlighted the company's leading position in the market, expressing confidence in its prospects.
The renewed coverage comes with a positive outlook, as the analyst believes Nextracker is the top solar tracking firm in the industry. Despite uncertainties surrounding production tax credits, the analyst expects these incentives to likely remain intact, which could benefit the company.
Nextracker's market position is strengthened by the cost-competitiveness of utility solar, which is less expensive than fossil fuels in most regions and represents half of the current interconnection queue. This queue is a vital indicator of potential future projects and demand for solar tracking systems.
The analyst also pointed out Nextracker's current valuation, noting that the stock is trading at 7.4 times the firm's fiscal year 2026 (ending in June) earnings estimate. This valuation suggests that there is potential for an increase in the company's stock multiples, indicating room for growth in the stock price.
Overall, the coverage reinstatement by Northland reflects a vote of confidence in Nextracker's business model and market position, with a significant price target suggesting a positive performance outlook for the company's shares.
InvestingPro Insights
Nextracker's strong market position, as highlighted by Northland's analyst, is further supported by InvestingPro data. The company's revenue growth of 34.43% over the last twelve months demonstrates its ability to capitalize on the growing demand for solar tracking systems. This aligns with the analyst's positive outlook on the company's prospects in the utility solar market.
InvestingPro Tips reveal that Nextracker holds more cash than debt on its balance sheet, indicating a solid financial foundation. This financial stability could be crucial as the company navigates potential changes in production tax credits and seeks to maintain its market leadership.
The company's profitability is also noteworthy, with an impressive operating income margin of 25.56% for the last twelve months. This efficiency in operations supports the analyst's view on Nextracker's cost-competitiveness in the industry.
While the stock is trading at a high Price / Book multiple of 4.3, the InvestingPro Fair Value of $50.1 suggests there may still be upside potential, aligning with Northland's $48 price target.
For investors seeking a deeper understanding of Nextracker's financial health and market position, InvestingPro offers 7 additional tips, providing a comprehensive analysis to inform investment decisions.
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