By Mackenzie Tatananni

Nextracker stock climbed in premarket trading Wednesday after strong third-quarter results prompted analysts to raise their price target on shares of the solar tracker company.

Late Tuesday, Nextracker reported net income of 79 cents a share, topping Wall Street's call for 48 cents. Revenue for the December quarter dipped 4.4% to $679.4 million, but surpassed the FactSet consensus estimate of $646 million. Adjusted earnings of $1.03 a share also beat calls for 58 cents.

Shares of the software company, which makes systems to help solar panels generate more energy, were up 22% to $48.28 on Wednesday as Guggenheim Securities analysts reiterated a Buy rating and lifted their price target to $62 from $50.

The analysts said they opted to change their price target after Nextracker's results materially surpassed their model as a result of higher gross margins.

"The company has tended to leave itself upside when it comes to margins, and we think that we are going to need to build that into our forecasts going forward," the analysts said.

While results moderately exceeded the firm's estimates at the top line, Nextracker's earnings before interest, taxes, depreciation and amortization delivered the biggest surprise. The company reported adjusted Ebitda of $186 million, beating Guggenheim's call for $127 million.

The company also reaffirmed its 2025 revenue guidance and raised its profit outlook.

Nextracker said it still expects revenue in the range of $2.8 billion to $2.9 billion but now forecasts a net profit of $467 million to $497 million, or $3.11 to $3.31 a share, and adjusted earnings between $3.75 and $3.95 a share.

Prior guidance called for a net profit of $378 million to $408 million, or $2.50 to $2.70 a share, and adjusted earnings of $3.10 to $3.30 a share.

During a conversation with management, the company indicated that it was continuing to find raw material and supply chain improvements, the Guggenheim analysts said. Their bull thesis remains grounded in the belief that Nextracker is "very good at managing its supply chain."

Write to Mackenzie Tatananni at mackenzie.tatananni@barrons.com

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January 29, 2025 08:17 ET (13:17 GMT)

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