Nextracker's Solar Ascendancy: Analyst Forecasts Doubling of Addressable Market Despite Valuation Hurdles

BMO Capital Markets analyst Ameet Thakkar initiates coverage on Nextracker Inc. NXT at a Market Perform rating and a price target of $69.

The analyst is constructive about the global demand for solar trackers and expects the ex-China total addressable market to more than double by the end of the decade. 

The analyst says Nextracker is a category leader with a growing backlog that provides visible revenue & earnings growth, margin uplift from IRA (~500 bps), and positive FCF.

Despite low barriers to entry, Thakkar sees Nextracker as well-positioned and insulated, given its strong global relationships with key solar developers and EPCs. 

Also, the analyst says that the company’s focus on independent row technology is an important differentiator as developers seek to minimize LCOEs.

Meanwhile, the magnitude of recent outperformance/valuation keeps the analyst on the sidelines.

Nextracker shares have outperformed the S&P 500 by 71% and the TAN by 141%. The analyst sees the stock trading at a 17% valuation premium on 2025E EV/EBITDA, which drives the Market Perform rating.

The analyst estimates FY25, FY26, and FY27 revenues of $2.8 billion, $3.1 billion, and $3.3 billion, respectively. 

Thakkar also projects a revenue CAGR of 14% between 2022 and 2030 and sees FY25-FY27 adjusted EBITDA of $711 million, $770 million, and $803 million, respectively.

Investors can gain exposure to the stock via IShares Global Clean Energy ETF ICLN and ProShares S&P Kensho Cleantech ETF CTEX.

Last month, Nextracker reported earnings of 96 cents per share, beating the analyst consensus estimate of 48 cents by 100%.

Price Action: NXT shares are trading higher by 0.96% at $57.93 on the last check Friday. 

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