Nextracker wins price target raise at Roth

Roth Capital Markets analyst Philip Shen said in a July 28 earnings preview that Nextracker (Nextracker Stock Quote, Chart, News, Analysts, Financials NASDAQ:NXT) could report another strong quarter for bookings, citing checks with three large developers that suggest activity remains steady. Shen maintained his “Buy” rating and raised his 12-month price target to $80 from $70.

Despite growing uncertainty about U.S. utility-scale solar demand beyond 2027, driven by a Trump executive order and potential changes to “construction start” criteria, Shen said Nextracker remains well-positioned through the end of 2027 thanks to the certainty provided by the final OBBB legislation and the company’s strong customer base. The OBBB, or Offshore Wind and Battery Bonus Bill, is a U.S. policy measure that extends tax incentives and regulatory support for renewable energy projects through year-end 2027, offering developers more planning confidence amid shifting federal policies.

Nextracker is a Fremont, California-based company that provides intelligent solar tracker and software solutions for utility-scale and ground-mounted solar projects. Its systems help solar panels follow the sun to improve energy output and project performance.

On July 7, President Donald Trump signed an executive order targeting so-called “unreliable” green energy, aiming to scrap subsidies for wind and solar under the aptly named One Big Beautiful Bill Act. The order calls on the Treasury to cancel tax credits for clean electricity and tighten foreign ownership rules. At the same time, the Interior Department is being told to stop giving renewables special treatment compared to “reliable” energy sources.

“The EO creates some uncertainty for 2028 and beyond, as there could be changes to ‘construction start,’” Shen said. “That said, even if there is limited safe-harboured volume in 2028 and beyond, we continue to see NXT well-positioned given the high exposure to Tier 1 customers, developers and asset owners with large balance sheets that could consolidate a healthy chunk of the market.

“Additionally, if the EO makes things more challenging, capital may require higher hurdle rates, while the industry could become much more risk-averse. Increased risk aversion could lead to a flight to quality to the industry-leading equipment vendors. Being the tracker industry leader that has consistently been taking share for the past few years, NXT could be the primary beneficiary in this bull scenario.”

On the other hand, Shen said bears may see risk that “construction start” rules could be changed to effectively eliminate safe harbour provisions beyond year-end 2027, potentially leading to a demand cliff starting in 2028.

“We recognize the risk to bookings for out-years from the Trump EO, though near-term, there is likely a flurry of activity leading to healthy/strong near-term bookings,” he said. “A D.C. contact shared here that ‘the objective of the executive order is to discourage eligibility for credits as much as possible.’ Our checks here, here, and here suggest that the Treasury could significantly raise the threshold for the 5% FMV rule and increase scrutiny for the physical work test in response to the executive order.”

He said another contact noted, “The physical work test is more ‘thin’ compared to the 5% rule since there is much more room for interpretation around what counts as physical work.” Taking these checks into account, while Shen sees downside risk to safe harbouring beyond year-end 2027, which could affect Nextracker’s volumes, he believes this could be mitigated by the company’s strong exposure to Tier 1 customers. With Nextracker’s backlog exceeding $4.5-billion in fiscal Q4, Shen estimates it could carry the company through and beyond mid-2026. He expects bookings to remain healthy until the backlog extends coverage through 2027.

“That all said, we see NXT’s US demand/share gain supported by NXT’s core tracker products, a blue-chip customer base, and growth from new businesses (Ojjo, Solar Pile Foundation, and Bentek),” he said. “NXT is currently trading at ~11x consensus CY’26 EBITDA, which is a ~41% premium to ARRY’s consensus CY’26 EBITDA of ~8x. Given NXT’s sustained outperformance over the past two years, we believe NXT deserves a strong premium over ARRY. All in, we expect the company to continue to execute despite the uncertainty around the EO.”

Shen thinks that Nextracker will post $757.7-million in Adjusted EBITDA on revenue of $3.30-billion in fiscal 2026. He expects those numbers to improve to $879.0-million on revenue of $3.64-billion in fiscal 2027.

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