On Friday, Citi maintained a Neutral rating on Array Technologies (NASDAQ:ARRY) with a $24.00 price target. The firm highlighted that despite low expectations, Array Technologies managed to deliver results that exceeded projections. The shortfall compared to in-quarter expectations was attributed to foreign exchange (FX) factors, while the fiscal year 2024 constant currency outlook remained stable, contrary to expectations of a decrease.
The analysis noted that the demand environment for Array Technologies has not significantly changed, with pressures on discretionary spending persisting. However, strong demand for large-scale digital core transformations has contributed to continued bookings momentum. Additionally, the company's generative AI-related initiatives have shown sequential bookings growth, with approximately $500 million in Gen-AI-related revenue realized year-to-date.
Array Technologies is considered a benchmark in the IT Services sector, and its performance is indicative of the broader market sentiment. The firm's results suggest that the sector may have moved past the lowest point in terms of investor sentiment and can now focus on execution and relative operational performance.
Looking ahead, Array Technologies' outlook for 2%-6% constant currency growth in the fourth fiscal quarter of 2024 is seen as a positive indicator, providing an improving exit rate. The ramp-up from large deal successes is expected to offer visibility into an accelerating growth rate in fiscal year 2025, which supports the company's prospects.
In other recent news, Array Technologies has reported a Q1 revenue of $153 million, slightly above their high-end guidance, and adjusted gross margins of 38.3%. The company also reported $400 million in new business and an order book valued at $2.1 billion. Despite potential uncertainties due to Antidumping/Countervailing Duties (AD/CVD) petitions, Array Technologies maintains their full-year revenue guidance of $1.25 billion to $1.4 billion.
Array Technologies also announced the resignation of CFO Kurt Wood, who will continue in an advisory role until the end of the third quarter. The terms of Wood's separation agreement, including severance pay and continued vesting of stock units, are expected to draw investor attention.
In terms of analyst ratings, Wells Fargo (NYSE:WFC) lowered its price target from $16.00 to $14.00 due to concerns over the pace of utility-scale solar deployments. Analysts from Barclays (LON:BARC) and BMO (TSX:BMO) Capital Markets expressed varying degrees of optimism about Array Technologies, with ratings ranging from "Overweight" to "Market Perform" rating. These are the recent developments for Array Technologies.
InvestingPro Insights
Array Technologies (NASDAQ:ARRY), a prominent player in the IT Services sector, has recently caught the attention of analysts and investors alike. The company's mixed financial performance and the market's response provide a multifaceted picture. According to InvestingPro data, Array Technologies holds a market capitalization of $1.73 billion, indicating its significant presence in the market. Despite a challenging economic landscape, the company's net income is expected to grow this year, which is a positive signal for potential investors, as noted in one of the InvestingPro Tips.
However, the company's high Price/Earnings (P/E) ratio of 30.21 and an even slightly higher adjusted P/E ratio of 30.92 for the last twelve months as of Q1 2024 suggest that the stock may be trading at a premium compared to earnings. Additionally, the Price/Book ratio as of the same period stands at 7.47, hinting at a high valuation in terms of the company's net asset value. These metrics are particularly relevant given the high earnings multiple and the high Price/Book multiple highlighted in the InvestingPro Tips.
Investors should also be aware of the recent volatility in Array Technologies' stock price, with a 6-month total price return of -28.73% as of the current year. This aligns with the InvestingPro Tip that notes the stock has taken a significant hit over the past six months. For those considering an investment in Array Technologies, there are additional InvestingPro Tips available that could provide further insight into the company's financial health and market position. With the exclusive coupon code PRONEWS24, readers can get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, offering access to a total of 12 InvestingPro Tips for Array Technologies.
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