ARRY: Margin And Backlog Trade Off Will Drive Shares Lower

Array Technologies' updated analyst price target has moved to $7.00, with analysts generally trimming expectations as they factor in lower margin guidance, higher assumed discount rates, and a richer future P/E multiple, despite solid bookings and backlog commentary across recent research notes.

Analyst Commentary

Recent Street research on Array Technologies has leaned cautious, with several firms cutting price targets and reassessing their models following the latest earnings update and forward guidance. While some still see potential upside, the tone across many reports has shifted toward risk control around margins, backlog quality, and execution on the product and acquisition roadmap.

Across the research set, bearish analysts have frequently cited margin pressure, softer adjusted EBITDA guidance, and a less favorable mix of growth drivers relative to past expectations. Even where ratings remain positive, lower price targets indicate a reset in what analysts are willing to pay for that growth given updated assumptions and discount rates.

Multiple firms have also flagged the trade off between backlog growth and profitability, with commentary that management actions to support the order book have come at the expense of margins. This has fed through to updated models that, in turn, justify lower price targets even where bookings and revenue commentary have been constructive.

There is also ongoing discussion of product transition risk, particularly around the H250 product and the removal of certain STI backlog, as well as debate on how much value is being created through acquisitions versus organic growth. These questions have kept some analysts on the sidelines with Neutral or Hold ratings even when they recognize long term demand drivers in utility scale solar tracking.

Amid these mixed views, the Street now shows a range of ratings from Hold and Neutral through to Outperform and Buy, with targets spanning from the mid single digits up to the high teens. That spread underlines how differently analysts are weighing margin risk, capital structure costs, and the timing and sustainability of any return to a higher EBITDA profile.

Bearish Takeaways

• Bearish analysts have cut price targets across the board, with several trims clustering around the US$7 to US$11 range, reflecting reduced conviction in prior valuation assumptions after softer margin guidance and updated discount rates.
• Multiple downgrades to Hold or Neutral point to concern that execution risk on product transitions and backlog quality, including the H250 rollout and STI backlog removal, could weigh on profitability and limit upside for the shares.
• Some reports highlight that management efforts to support record or strong backlog have come at the expense of margins, raising questions about the trade off between growth and earnings power and how that affects the justified P/E multiple.
• There are recurring worries about reliance on acquisitions for a significant portion of historic growth and the cost of preferred equity, with at least one firm flagging that this cost is a large share of 2026 EBITDA guidance, which bearish analysts see as a constraint on value creation.

What's in the News

• China is considering restrictions on exports of solar manufacturing equipment, which could affect global supply chains for utility scale solar projects that use Array Technologies' trackers (Reuters).
• Array Technologies has proposed an amendment to its Certificate of Incorporation to declassify its Board, with a plan to move to annual director elections starting at the 2027 Annual Meeting and fully in place from the 2029 Annual Meeting, subject to stockholder approval at the May 19, 2026 Annual Meeting.
• The company reported goodwill impairment charges of $102,560,000 for the fourth quarter ended December 31, 2025, compared with $74,000,000 a year earlier.
• Array provided earnings guidance for the first quarter of fiscal 2026, with revenue expected to be approximately $200 million, and full year 2026 revenue expected in a range of $1.4 billion to $1.5 billion.

Valuation Changes

• Fair Value: Updated fair value moved from $6.70 to $7.00, a small upward adjustment in the model.
• Discount Rate: Discount rate increased from 10.74% to 11.22%, indicating a slightly higher required return being applied to future cash flows.
• Revenue Growth: Assumed revenue growth shifted from 0.33% to 6.52%, a very large change in the top line growth input.
• Net Profit Margin: Assumed profit margin moved from 4.78% to 1.90%, a significant reduction in expected profitability on future sales.
• Future P/E: Future P/E multiple increased from 21.65x to 50.01x, implying a much higher valuation being applied to projected earnings.