On Friday, Evercore ISI affirmed its optimistic stance on TPI Composites (NASDAQ:TPIC), maintaining an Outperform rating and a price target of $8.00. The firm highlighted that the first half of 2024 is unfolding as anticipated, with the company undergoing transitions expected to impact its short-term performance.
The analyst from Evercore ISI noted that no unforeseen developments have occurred and that TPI Composites is on a path to improved profitability in the latter half of the year. This improvement is predicted to manifest as a return to mid-single digit adjusted EBITDA margins and a positive free cash flow (FCF).
TPI Composites concluded the first quarter with $117 million in cash reserves. Although some cash burn is anticipated in the first half of the year, this is considered part of the process of escalating production. The analyst underscored the importance of cash preservation during these challenging times, which will remain a crucial strategy for the company throughout the rest of the year.
The company's financial position is expected to be solid, following the completion of the Oaktree refinancing in the previous year. Evercore ISI expressed a cautious optimism for TPI Composites and the wind industry overall, citing good internal progress with production line startups and transitions proceeding according to plan.
Additional factors contributing to the anticipated stronger performance in the second half of 2024 include the absence of large warrant charges, the conclusion of the Nordex, Matamoros contract by June 30, the lack of Proterra bankruptcy charges, and the return of TPIC’s field service organization to revenue-generating activities. These elements are expected to support TPI Composites in navigating the current market conditions effectively.
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