Company Reports

No-moat Nextracker continued its trend of strong financial results and released fiscal 2025 guidance in line with our estimates. We plan to update our model in conjunction with the 10-K filing in the coming weeks, but at an initial glance, we see no reason to change our $37 fair value estimate. We reiterate our nonconsensus view that long-term margins will moderate from recent levels.

We increase our fair value estimate for no-moat Nextracker to $37 per share from $34 after fiscal 2024 third-quarter results. Driving our higher valuation is a slight boost to our gross margin forecast. However, we continue to forecast moderating margins long term. At current prices, we view shares as overvalued as we believe investors are extrapolating recent margin outperformance to continue indefinitely.

Nextracker is the world’s largest manufacturer of intelligent tracker systems for utility-scale solar projects globally.

Nextracker is the world’s largest manufacturer of intelligent tracker systems for utility-scale solar projects globally.

We initiate coverage of Nextracker with a no-moat rating, $34 fair value estimate, and a Very High Morningstar Uncertainty Rating. Nextracker benefits from robust profitability and a strong management team, but we believe margins are approaching peak levels and view shares as overvalued.