BofA Downgrades FTC Solar On Delays, Inflation And Low Margins: What's Next?

FTC Solar Inc FTCI faces near-term challenges and there are concerns about the long-term profitability of its business, according to BofA Securities.

The FTC Solar Analyst: Julien Dumoulin-Smith downgraded the rating for FTC Solar from Neutral to Underperform, while lowering the price target from $9 to $5.

The FTC Solar Thesis: The company has among the highest exposure to “potential delay dynamics associated with utility-scale solar projects in the U.S. for 2022,” Dumoulin-Smith said in the downgrade note.

FTC Solar’s revenue generation is focused on the U.S. and international projects are expected to “contribute meaningfully only from 2023 and beyond,” he added.

“FTCI’s design-to-value initiative (cost-reduction roadmap) has yet to materialize in the GM% improvement,” the analyst wrote. He further mentioned that the consensus estimates reflect “a swift recovery into 1Q22, which we perceive to be less likely.”

“Without the impetus provided by the BBB and with the inflation pervading solar supply chains, FTCI’s peers have de-rated, with risk of further multiple compression into 2022 expectations are level-set,” Dumoulin-Smith said.

FTCI Price Action: Shares of FTC Solar had declined by 12.42% to $5.33 Friday morning.

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