Array Technologies (ARRY): Rethinking Valuation After Bank of America Downgrade on Margin and Growth Concerns

Array Technologies (ARRY) just hit the headlines after Bank of America analysts downgraded the stock from Neutral to Underperform, citing higher margin risks and a lack of strong near-term growth drivers. This shift in sentiment comes as concerns over potential tariff impacts and pricing pressures have started to overshadow recent product news from the company. If you are holding the stock or considering jumping in, it is natural to wonder if this event hints at a deeper challenge or simply marks a new phase of recalibration for ARRY’s prospects.

This downgrade arrives just weeks after Array showcased new compatibility for its DuraTrack and OmniTrack systems, hoping to assert more leadership in next-generation solar technology. Despite the cautionary analyst move, the company’s share price actually rallied by nearly 50% over the past month before cooling off. This impressive surge has pushed its one-year gain to 7%, but the stock is still down substantially over three years. Market momentum has clearly shifted, but it remains an open question whether this pace is sustainable in the face of ongoing risks around profit margins and regulatory headwinds.

With Array’s stock bouncing around on changing headlines and sentiment, is this a moment to buy on weakness or is the market already factoring in everything about the company’s future growth potential?

Most Popular Narrative: 16.9% Undervalued

The most widely followed narrative currently sees Array Technologies as significantly undervalued, factoring in strong expectations for its future growth, improved margins, and expanding market reach. This viewpoint suggests that the recent market caution provides a value opportunity if optimistic assumptions play out.

Enhanced product mix and technology innovation, with over 35% of the order book for recently launched, higher-value products targeting challenging terrains and emerging extreme weather concerns. This increases pricing power and supports margin expansion, thus improving gross margins and earnings.

Curious what assumptions drive this bold valuation? The narrative banks on rapid sales gains, a dramatic earnings turnaround, and future profitability levels that demand careful scrutiny. Wondering how high these projections soar and which trends they count on? There is more to this story. Find out what powers the fair value behind the current price target.

Result: Fair Value of $9.30 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, persistent regulatory uncertainty and increasing price competition could derail those bullish forecasts. This could result in a rebound for Array that is far slower than expected.

Find out about the key risks to this Array Technologies narrative.

Another View: What Does the SWS DCF Model Suggest?

A different approach uses the SWS DCF model, focusing on Array Technologies' future cash flows rather than current market multiples. This method also points to undervaluation, but it is based on different assumptions about long-term growth.

Curious to see how this perspective measures up? Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Array Technologies for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Array Technologies Narrative

If the analysis above does not align with your perspective, or you enjoy digging into the details yourself, you can quickly craft your own narrative in just a few minutes. Do it your way

A great starting point for your Array Technologies research is our analysis highlighting 3 key rewards and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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