What Happened?
Shares of solar energy systems company Shoals (NASDAQ: SHLS) jumped 5.7% in the afternoon session after it received a key analyst upgrade from Roth/MKM following a strong second-quarter earnings report. The investment firm lifted its rating on the stock to 'Buy' from 'Neutral' and doubled its price target to $10.00. The upgrade followed Shoals’ announcement that its second-quarter revenue jumped 11.7% from the prior year to $110.8 million, while its earnings per share of $0.10 surpassed analyst forecasts. Bolstered by the results, Shoals also increased its full-year revenue guidance, pointing to a record order backlog which signaled robust demand for its solar energy products.
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What Is The Market Telling Us
Shoals’s shares are extremely volatile and have had 58 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 27 days ago when the stock gained 3.3% on the news that an upgrade from Jefferies earlier in the week continued to fuel investor optimism. The stock received a boost on Monday when Jefferies upgraded the shares from a "Hold" to a "Buy" rating and increased its price target to $7.20 from $4.90. Analysts at the firm cited improved growth prospects and tailwinds from U.S. tax and spending legislation benefiting the solar sector as reasons for the positive revision. This positive sentiment follows other recent optimistic analyst actions, including a price target increase from Mizuho in early June. The company, which provides electrical balance of system (EBOS) solutions for solar energy projects, also recently announced its expansion into the South American market with a new contract in Chile. Investors are now looking ahead to the company's second-quarter earnings report, which is scheduled for release before the market opens on August 5, 2025.
Shoals is down 19.4% since the beginning of the year, and at $4.88 per share, it is trading 25% below its 52-week high of $6.50 from September 2024. Investors who bought $1,000 worth of Shoals’s shares at the IPO in January 2021 would now be looking at an investment worth $157.36.
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