Baird starts Array Technologies at Outperform on solar growth

Investing.com -- Baird initiated coverage of Array Technologies with an Outperform rating and a price target of $11, saying the solar tracker maker stands to benefit from U.S. policy clarity, rising utility-scale solar demand, and its strong competitive position in a consolidating market.

Array, one of the world’s largest providers of utility-scale solar trackers, operates an asset-light model and holds the second-largest market share in the U.S. behind Nextracker. The North American tracker market is dominated by a few players, with Array competing on both technology and cost.

Baird said the latest U.S. Treasury guidance on clean energy tax incentives was “much better than feared” and removed a key policy overhang for the sector. Shares of Array jumped about 27% on Aug. 15 after the guidance was released, compared with a flat S&P 500.

“We steer investors toward utility-scale solar,” the brokerage wrote, citing stronger developer balance sheets, grid constraints, and more supportive economics than residential solar, which has faced policy uncertainty and several bankruptcies.

Baird sees upside for Array from its SmarTrack software, which helps optimize solar panel performance and could become a recurring revenue stream as the company shifts from upfront sales to subscriptions.

Risks include project delays, stiff competition—particularly from Nextracker—and potential margin erosion. Array ended the second quarter with $377 million in cash and $709 million in debt, including a $425 million convertible due 2028.

“Our price target assumes a 9x EV/EBITDA multiple,” Barid said. Multiple is in line with peers. Array’s technology improvements and exposure to a fast-growing utility solar market support the bullish view.

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