Nextracker hits all-time high after Guggenheim upgrades to Buy

Nextracker shares reached an all-time intraday high of $68.75 on Monday after Guggenheim upgraded its rating to Buy from Neutral with a $74 price target. The upgrade was driven by safe harbor clarifications from the IRS, which were seen as positive for the company. The stock price increased by 9% as a result.

Nextracker (NASDAQ:NXT) shares reached an all-time intraday high of $68.75 on Monday following Guggenheim's upgrade of its rating to Buy from Neutral, with a $74 price target. The upgrade was driven by recent safe harbor clarifications from the IRS, which were seen as beneficial for the company. The stock price increased by 9% as a result.

Guggenheim analyst Joseph Osha noted that the updated safe-harbor rules released by the IRS are particularly favorable for tracker companies like Nextracker. The new rules specify that racking installation qualifies as a physical work test for tax credit eligibility. Osha highlighted that this provision includes mounting equipment, support structures, and other power conditioning equipment, which are core products in Nextracker’s business.

The IRS guidelines also allow for "off-site work of a significant nature" to qualify projects for tax credits, provided the work is tied to a specific project. This flexibility is advantageous for companies with established domestic supply chains, like Nextracker, which are better positioned to stay within Foreign Entity of Concern (FEOC) limits and benefit from additional clarity on FEOC implementation potentially coming as early as this week.

Despite Nextracker’s stock increasing by 50% over the past year compared to the S&P 500’s 15% gain, Guggenheim views the current valuation as attractive. The firm’s 2025 and 2026 EBITDA estimates are 10.2x and 9.6x, respectively, with a target multiple of 12x 2026 EBITDA to support its $74 price target.

The upgrade by Guggenheim is seen as a vote of confidence in Nextracker’s ability to capitalize on the recent IRS rule changes and its established domestic supply chain. Investors should monitor the company's progress as it navigates the evolving regulatory landscape and executes on its growth strategies.

References:
[1] https://finance.yahoo.com/news/nextracker-stock-rises-guggenheim-upgrades-133624109.html
[2] https://seekingalpha.com/news/4486637-nextracker-hits-all-time-intraday-high-as-guggenheim-upgrades-to-buy
[3] https://www.investing.com/news/stock-market-news/nextracker-stock-rises-after-guggenheim-upgrades-on-irs-rule-changes-4197811