Array Technologies Downgraded by BofA on Margin Risks and Tariff Concerns
ByAinvest
Sunday, Sep 14, 2025 10:52 am ET2min read
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Research analyst Dimple Gosai at Bank of America highlighted that optimism around safe harbor demand pull-forward appears overstated. Smaller developers are more likely to prioritize transformers than trackers in safe harbor strategies. Additionally, margin pressures from tariffs have led Array to trim its 2025 gross margin guidance to 28% to 29% from 29% to 30% [1].
New tariffs on components imported from Mexico, previously exempt under the USMCA trade agreement, will add 25% costs to items like gearsets. Similar 25% tariffs on Indian components are expected in November, compounding the strain. Although Array is passing along about three-quarters of these costs to customers, Gosai noted that the company is also sharing some benefits from the Inflation Reduction Act’s 45X production credits, which could further weigh on profitability [1].
Bank of America is skeptical that safe harbor incentives will generate meaningful near-term demand. Array itself has stressed that permitting, interconnection delays, and labor bottlenecks limit the industry’s ability to accelerate project schedules. While Tier 1 customers have largely locked in safe harbor benefits, Tier 2 developers remain mixed, and any potential disruption would likely emerge years down the line [1].
Despite these challenges, Array continues to push for market share gains in U.S. utility-scale trackers, supported by domestic content positioning and new products such as Omni and Skytrak. However, near-term headwinds outweigh these positives, particularly with tariff costs set to rise and safe harbor benefits less impactful than hoped [1].
The bank cut its price objective on Array to $7 from $8 a share, valuing the company through a blended enterprise value-to-ebitda and discounted cash flow approach, applying peer multiples in the solar and clean energy sector [1].
In the latest trading session, Array Technologies, Inc. closed at $7.67, marking a -2.29% move from the previous day. The stock fell short of the S&P 500, which registered a loss of 0.05% for the day. Meanwhile, the Dow lost 0.59%, and the Nasdaq, a tech-heavy index, added 0.45% [2].
Investors will be eagerly watching for the performance of Array Technologies, Inc. in its upcoming earnings disclosure. The company's upcoming EPS is projected at $0.22, signifying a 29.41% increase compared to the same quarter of the previous year. For the full year, the Zacks Consensus Estimates are projecting earnings of $0.67 per share and revenue of $1.2 billion, which would represent changes of +11.67% and +31.17%, respectively, from the prior year [2].
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Array Technologies (NASDAQ:ARRY) was downgraded to Underperform from Neutral by Bank of America analysts due to heightened margin risks and limited near-term catalysts. The stock has rallied 50% in the past month, but the downgrade cites concerns over margin pressures and tariff risks.
Array Technologies (NASDAQ:ARRY) faced a significant setback on Friday as analysts at Bank of America downgraded the company to Underperform from Neutral, citing heightened margin risks and limited near-term catalysts. The stock, which had rallied nearly 50% in the past month, now faces challenges from margin pressures and tariff risks [1].Research analyst Dimple Gosai at Bank of America highlighted that optimism around safe harbor demand pull-forward appears overstated. Smaller developers are more likely to prioritize transformers than trackers in safe harbor strategies. Additionally, margin pressures from tariffs have led Array to trim its 2025 gross margin guidance to 28% to 29% from 29% to 30% [1].
New tariffs on components imported from Mexico, previously exempt under the USMCA trade agreement, will add 25% costs to items like gearsets. Similar 25% tariffs on Indian components are expected in November, compounding the strain. Although Array is passing along about three-quarters of these costs to customers, Gosai noted that the company is also sharing some benefits from the Inflation Reduction Act’s 45X production credits, which could further weigh on profitability [1].
Bank of America is skeptical that safe harbor incentives will generate meaningful near-term demand. Array itself has stressed that permitting, interconnection delays, and labor bottlenecks limit the industry’s ability to accelerate project schedules. While Tier 1 customers have largely locked in safe harbor benefits, Tier 2 developers remain mixed, and any potential disruption would likely emerge years down the line [1].
Despite these challenges, Array continues to push for market share gains in U.S. utility-scale trackers, supported by domestic content positioning and new products such as Omni and Skytrak. However, near-term headwinds outweigh these positives, particularly with tariff costs set to rise and safe harbor benefits less impactful than hoped [1].
The bank cut its price objective on Array to $7 from $8 a share, valuing the company through a blended enterprise value-to-ebitda and discounted cash flow approach, applying peer multiples in the solar and clean energy sector [1].
In the latest trading session, Array Technologies, Inc. closed at $7.67, marking a -2.29% move from the previous day. The stock fell short of the S&P 500, which registered a loss of 0.05% for the day. Meanwhile, the Dow lost 0.59%, and the Nasdaq, a tech-heavy index, added 0.45% [2].
Investors will be eagerly watching for the performance of Array Technologies, Inc. in its upcoming earnings disclosure. The company's upcoming EPS is projected at $0.22, signifying a 29.41% increase compared to the same quarter of the previous year. For the full year, the Zacks Consensus Estimates are projecting earnings of $0.67 per share and revenue of $1.2 billion, which would represent changes of +11.67% and +31.17%, respectively, from the prior year [2].
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