BofA Is Double-Upgrading Solar Stock FTC Despite 'Ever-Worsening Macro Backdrop'

Despite a tough macroeconomic backdrop, analysts at BofA Securities expect FTC Solar Inc.'s FTCI volumes and margins to rebound in the coming years as industry-wide solar panel supply improves and delayed projects are completed.

The FTC Solar Analyst: BofA's Julien Dumoulin-Smith double upgraded FTCI to a Buy rating from Underperform, while raising the price target from $2 to $3.50.

The FTC Solar Takeaways: The introduction of new products, the expansion of the client base and the expansion of the company's foreign presence as the primary drivers of top-line expansion, Dumoulin-Smith said in the note. 

In terms of fundamentals, the analyst believed FTCI provides leverage to utility scale solar's recovery through a structural inflection in financials.

According to updated projections by BofA, increased volumes and a more efficient operational expenses (opex) structure will drive FTCI's EBITDA margin to increase to $31.3 million from $19.8 million in 2024 and to $57.1 million from $32.2 million in 2025.

Nonetheless, according to BofA, FTC Solar's narrative continues to entail a "significant execution risk," but because expectations are sufficiently low, management has adequate room to reestablish confidence with the Street.

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FTCI Price Action: On March 15, 2023, FTC Solar had a wild volatile session. Shares rose as high as 15% to $2.79 in the first hour of trading before giving back all of the gains and finished 0.41% down on the day.

FTC Solar dropped by 16.5% over the previous week and 9.7% over the past month. Likewise, the year-to-date performance is negative by 9.5%, and the stock price is 61% lower than it was a year ago. 

The 50-day moving average (MA) is at $2.79, which is 15.4% higher than current prices. The 200-day MA is at $3.30, which is 36.3% higher than current prices.

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Photo: Diyana Dimitrova via Shutterstock