Barclays upgrades Shoals Technologies on battery storage and data center demand

Investing.com -- Barclays upgraded Shoals Technologies to Overweight from Equal Weight and raised its price target to $10 from $7, citing growth opportunities in battery energy storage systems (BESS) and data centers.

The brokerage said Shoals’ entry into these markets could become the fastest-growing segment over the next five years.

Data centers, artificial intelligence, and hyperscalers are increasingly a large draw on the electric grid, both domestically and abroad

“While the need for incremental power to address this demand is no secret and estimates are constantly being revised upward, we think the demand for storage tied to data centers is in the earlier innings,” analysts at Barclays said.

It estimates a U.S. addressable market of around $2 billion by 2030 and $4 billion by 2035.

Barclays analysts now see Shoals 2027 getting higher revenue. Now it expects it to be $639 million, while the consensus is of $580 million, on the expected buildout of its BESS business.

Shoals plans to sell new BESS solutions through existing utility-scale solar customers, direct data center sales, and co-engineered offerings with battery integrators.

Barclays noted the company is well-positioned in the “middle market,” offering flexibility and scale that larger competitors may not pursue.

The firm highlighted that growing data center power demand and stress on the electric grid could accelerate adoption of Shoals’ storage solutions, potentially easing grid expansion needs and increasing interconnection speed for large-scale energy users.

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