NEXTracker Sparks Goldman Analyst's Optimism Thanks To Tax Credits

Goldman Sachs analyst Brian Lee initiated coverage on NEXTracker Inc NXT at a Buy rating with a price target of $62.

Lee expects NXT to benefit from the volume tailwind from the IRA, the 45X tax credits in the US, as well as increased penetration internationally. 

In particular, the analyst estimates the annual benefit from tax credit to be ~$80 million-$185 million or incremental EPS of ~$0.55 to $1.25, or ~20%-50% upside to their current FY25 estimates.

Lee estimates EPS of $2.15 in FY24, $2.62 in FY25, and $3.11 in FY26.

NXT is poised to leverage its leadership position in maintaining stable pricing and margins and expects an earnings growth CAGR of ~20% through F2026.

Moreover, along with a capex-light business model ($5 million-$10 million capex/year), the analyst expects a significant FCF generation over the coming years.

Price Action: NXT shares are trading higher by 1.19% at $42.62 on the last check Tuesday. 

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