SHLS - Shoals sizzles after raising low end of revenue guidance; Northland upgrades

Shoals Technologies ( NASDAQ: SHLS ) +22% in early trading Tuesday after the solar energy products supplier topped expectations for Q3 adjusted earnings and revenues while narrowing its revenue forecast for the full year.

Shoals ( SHLS ) said revenues rose 52% Y/Y to a quarterly record $90.8M, citing higher sales volumes due to increased demand for pV balance of system equipment; adjusted EBITDA jumped 57% to $26.6M, and backlog and awarded orders in Q3 surged 74% to a record $471.2M.

The company forecasts full-year revenues of $310M-$325M, up from prior guidance of $300M-$325M, and adjusted EBITDA of $80M-$86M, compared with $77M-$86M previously.

In an upbeat assessment of solar market conditions, CEO Jason Whitaker said "the two-year tariff exemption for Chinese solar panels, the recently passed Inflation Reduction Act and higher energy prices have given our customers and end-users the confidence to reinitiate previously delayed projects, make multi-year commitments to invest in solar generation and prioritize product availability and performance over price."

Northland Capital upgraded Shaols ( SHLS ) shares to Outperform from Market Perform with a $30 price target, citing the surging backlog which "bodes well given SHLS tends to convert backlog to revenue in 9-12 months and add incremental revenue (from same-year sales) along the way."

Shoals ( SHLS ) "delivered its first EV charging 'system solutions' in Q3... exactly the kind of 'proof point' we were looking for to show some degree of demonstrated success with the EV charging initiative," Northland's Donovan Schafer wrote.

Maintaining its Buy rating and ticking its price target to $41 from $40, Oppenheimer sees investors becoming "increasingly confident in Shoals' growth trajectory" after posting strong numbers including a $144M boost in quarterly backlog.

Also citing the strong quarter and accelerating backlog, J.P. Morgan analysts raised their Shoals ( SHLS ) PT to $35 from $32 with an Overweight rating.

Shoals Technologies' ( SHLS ) stock price return shows a 15% YTD gain but a 25% decline during the past year .

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