NEXTracker (NASDAQ:NXT) is seeing significant growth in the solar boom

According to Wood Mackenzie, due to the growing demand for renewable energy solutions, solar energy capacity worldwide is expected to triple by 2033. NEXT Tracker (NASDAQ:NXT), a provider of innovative solar tracking technologies that are key to the success of large-scale solar initiatives, is well-positioned to participate in the industry’s rapid growth.

By enabling solar panels to move in the direction of the sun, these technologies significantly optimize energy production, providing utilities and power generation projects with a significant return on investment (ROI). Notably, NEXTracker reported revenue growth of 42% to $737 million in the most recent quarter (Q4FY24), with revenue expected to grow at least 12% in fiscal 2025. The company’s shares are up about 43% in the past year . Nevertheless, the stock still looks attractively valued, which strengthens Nextracker’s position as an attractive growth stock in the renewable energy sector.

NEXTracker is in high demand

NEXTracker has established itself as a leader in developing effective solar tracking technologies and software. Its aim is to ensure the availability and affordability of renewable energy for all. Integrated solar tracking and software solutions used in utility-scale solar and distributed generation projects around the world enable solar panels to follow the sun’s path to optimize installation performance. The resilience of Nextracker systems is demonstrated in their ability to adapt to uneven terrain and survive in difficult weather conditions, thus increasing their durability and reliability.

The company recently purchased US-based renewable energy company Ojjo, which specializes in foundation technology and services used in ground-based, utility-scale solar power generation applications. The acquisition, combined with the NEXTracker intelligent solar tracking system, provides a more comprehensive solution for engineering procurement companies and solar developers, increasing their capabilities to engineer, design and install in a variety of ground conditions.

As of 2021, NEXTracker has developed or established 20 new manufacturing partner facilities in the U.S., demonstrating its strong growth. The company’s global annual supply capacity currently stands at over 50 GW, including a U.S. capacity of over 30 GW.

NEXTracker ended 2024 on a strong note, achieving the momentous milestone of 100 GW of global delivery since inception. This significant achievement was accompanied by a record backlog of over $4 billion, highlighting strong demand in both the 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 year 2024 ending March 31, 2024. Fourth-quarter revenue of $737 million increased 42% year-over-year and easily exceeded consensus expectations by $52.53 million. 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 year 2024, the company achieved an impressive revenue of $2.5 billion, representing 31% year-over-year growth. Adjusted net income for the year was $451 million, with adjusted diluted EPS of $3.06. For the year, operating cash flow was $429 million and adjusted free cash flow was $427 million.

Management released annual guidance for fiscal year 2025, forecasting revenue of $2.8 billion to $2.9 billion. Adjusted EBITDA is estimated at $600 million to $650 million, and adjusted diluted EPS guidance ranges from $2.89 to $3.09.

What is the price target for NXT stock?

Analysts tracking NEXTracker are cautiously optimistic about the company’s stock. For example, HSBC analyst Sean McLoughlin recently lowered his price target on the stock from $65 to $60 while maintaining a Buy rating. He reported “strong” fourth-quarter results and fiscal 2025 guidance, highlighting NEXTracker’s growth prospects in the U.S. and international markets.

NEXTracker, Inc. earned a Strong Buy rating based on 16 buys and five holds over the last three months. The average price target for NXT stock is $60.68, representing a potential upside of 7.02% from current levels.

The stock is somewhat volatile, with a beta of 1.94, although it has been trending generally upward for some time, rising over 86% over the last three years. The stock is trading at the top of its 52-week price range of $32.14-$62.31 while showing continued positive price momentum, trading above the 20-day (55.67) and 50-day (52.67) moving averages . The company is trading at an attractive valuation compared 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 an attractive investment. Unique solar tracking technologies and software solutions deliver attractive ROI for utility and power generation projects. The company’s strong financial performance in the last quarter, expected growth of at least 12% in fiscal year 2025 and attractive current valuation further confirm its investment attractiveness.

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