Shoals Technologies Group (SHLS) PT Raised to $40 at Cowen After Its First Earnings Call

March 16, 2021 6:42 AM EDT
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Price: $33.07 +2.23%

Rating Summary:
    7 Buy, 4 Hold, 0 Sell

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Today's Overall Ratings:
    Up: 17 | Down: 13 | New: 41
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Cowen analyst Jeffrey Osborne raised the price target on Shoals Technologies Group (NASDAQ: SHLS) to $40.00 (from $39.00) after the company's first earnings call post the IPO. International expansion and opportunities with solar plus storage are seeing momentum, and the company hired a new head of EV charging to lead the charging initiative.

The analyst reiterated a Market Perform rating noting 4 takeaways from the call:

1) revenue and EBITDA guidance reflected a modest increase vs. the Street's expectations and commentary around solar growth was encouraging with a 50% increase in quoting activity

2) Shoal's hired Jeff Tolnar, the former Chief Commercial Officer from Greenlots, which was acquired by Shell, to be the new head of EV Charging

3) Management alleviated investor concerns about copper and aluminum price increases impacting
margins or growth, noting that commodity prices are passed through to customers and quotes are only good for 7 days for acceptance due to commodity exposure.

4) backlog came in at $157mn (a 46% increase y/y), providing 67% coverage for the midpoint of $235mn guidance for 2021 revenue.

The analyst stated "The company’s ability to reduce the cost to install EBOS solutions while offering a customized solution system for individual projects sets Shoals apart from other EBOS suppliers and enables Shoals to capture continued market share gains. Plans to leverage the existing customer base for international expansion, the introduction of BLA 2.0 product, plans to capture additional EBOS wallet share from customers by expanding its portfolio offerings, among other growth avenues like battery storage and EV charging infrastructure, provide multiple levers for long-term sustainable growth. While we like the story and are excited about opportunities for growth, valuation is keeping us on the sidelines."

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