Due to the increasing demand for renewable energy solutions, solar power capacity worldwide is projected to triple by 2033, according to Wood Mackenzie. NEXTracker (NASDAQ:NXT), a provider of innovative solar tracker technologies integral to the success of large-scale solar initiatives, is well-positioned to participate in the industry’s surging growth.
By enabling solar panels to move following the sun’s direction, these technologies significantly optimize energy production, providing utilities and power generation projects with considerable return on investment (ROI). Notably, NEXTracker reported a revenue increase of 42% to $737 million in the most recent quarter (Q4 FY24), with expected revenue growth of at least 12% in Fiscal 2025. The company’s stock is up roughly 43% in the past year. Nonetheless, shares still look attractively valued, solidifying Nextracker’s position as a compelling growth stock in the renewable energy sector.
NEXTracker Enjoying Robust Demand
NEXTracker has firmly established itself as a leader in developing effective solar tracking technologies and software. It is dedicated to making renewable power accessible and affordable for all. Its integrated solar tracker and software solutions, utilized in utility-scale and distributed generation solar projects globally, enable solar panels to follow the sun’s path for optimized plant performance. The resilience of the Nextracker systems is evident in their ability to adapt to uneven terrain and survive harsh weather conditions, thus enhancing their durability and reliability.
The company has recently purchased US renewable energy company Ojjo, which specializes in foundation technology and services used for utility-scale ground-mount solar power generation applications. The acquisition, paired with NEXTracker’s smart solar tracker system, presents a more comprehensive solution to engineering procurement construction companies and solar power plant developers, enhancing their project development, design, and installation capabilities across varying soil conditions.
Since 2021, NEXTracker has expanded or established 20 new partner manufacturing facilities in the U.S., demonstrating its robust growth. The company’s global annual supply capacity now stands over 50GW, including a U.S. capacity exceeding 30GW.
NEXTracker ended FY2024 on a high note, having achieved the momentous milestone of shipping 100GW globally since its founding. This significant achievement was accompanied by a record backlog of over $4 billion, highlighting robust demand from both U.S. and international markets and underscoring the company’s strong growth trajectory.
Analysis of NEXTracker’s Recent Financials
NEXTracker recently announced financial results for the fourth quarter and Fiscal 2024, ending March 31, 2024. The fourth quarter revenue of $737 million increased 42% year-over-year and handily surpassed consensus expectations by $52.53 million. The GAAP net income reached $223 million, while adjusted EBITDA increased significantly by 120% year-over-year to $160 million. Adjusted EPS of $0.96 beat estimates by $0.31.
In Fiscal 2024, the company achieved impressive revenue of $2.5 billion, an increase of 31% year-over-year. The adjusted net income for the year was recorded at $451 million, with an adjusted diluted EPS of $3.06. The year witnessed an operating cash flow of $429 million and an adjusted free cash flow of $427 million.
Management issued annual guidance for FY2025, projecting revenue between $2.8 billion and $2.9 billion. The adjusted EBITDA is estimated between $600 million and $650 million, and the adjusted diluted EPS forecasts range from $2.89 to $3.09.
What is the Price Target for NXT Stock?
Analysts following NEXTracker have been cautiously optimistic about the stock. For instance, HSBC analyst Sean McLoughlin recently lowered the price target on the shares from $65 to $60 while maintaining a Buy rating. He noted “strong” Q4 results and Fiscal 2025 guidance, underlining NEXTracker’s growth prospects in the U.S. and international markets.
NEXTracker, Inc. is rated a Strong Buy based on 16 Buys and five Holds over the past three months. The average price target for NXT stock is $60.68, which represents a potential upside of 7.02% from current levels.
The stock has been somewhat volatile, with a beta of 1.94, though it has been trending upward overall for some time, climbing over 86% in the past three years. It trades at the higher end of its 52-week price range of $32.14 – $62.31, while demonstrating ongoing positive price momentum by trading above its 20-day (55.67) and 50-day (52.67) moving averages. It trades at an attractive valuation relative to its industry peers, with a P/E (price-to-earnings) ratio of 18.12x compared to the Solar industry average of 26.10x.
Final Thoughts on NXT
NEXTracker’s positioning in the rapidly growing renewable energy market makes it a compelling investment consideration. Its unique solar tracking technologies and software solutions provide an attractive ROI for utilities and power generation projects. The company’s strong financial performance in the recent quarter, expected growth of at least 12% for Fiscal 2025, and attractive current valuation further underpin its investment appeal.
