NEXTracker: Tracking the Future of Solar with a $70 Price Target

Trevor Carnovsky
May 12
5 min read

Updated: Nov 2

Company Background and Competition:

Founded in 2013 by Dan Shugar, NEXTracker provides advanced tracking technology to ensure solar farms can operate efficiently by capturing the sun's energy throughout the day. NEXTracker went public through an IPO in 2023, increasing efforts to advance solar energy capabilities. The company has over twenty-five manufacturing locations within the U.S., with manufacturing facilities in India, Europe, Australia, and Latin America. The business has seen serious revenue growth over the last three years with a CAGR of 30%. From 2013 through 2023, NEXTracker has maintained industry leadership with a global market share of 23%, while its closest competitor, Array Technologies, has a market share of 16%. Though Array Technologies has reported FY24 revenues of 1 billion dollars, compared to NEXTracker's FY24 revenues of 2.5 billion. Adding to this, Array Technologies has experienced a net loss of 240 million and has a debt-to-equity ratio of 574%. During the same period, NEXTracker experienced a net income of 496 million and had a debt-to-equity ratio of 15%, with a times interest earned ratio of 42. While NEXTracker has strong financials and continues to experience significant global growth, like any investment, there are some risks associated with the company.

Revisiting the Inflation Reduction Act:

Like First Solar, a company I have previously covered, NEXTracker has benefited from the Inflation Reduction Act (IRA) and carries similar risks. These risks include sensitivity to changes in governmental policy and the potential reduction in tax credits associated with the IRA. There have been no significant updates from Congress regarding the IRA. I have previously argued that any revision to the IRA is unlikely to cut tax benefits for the solar industry significantly, if at all.

Boom or Bottleneck? NEXTracker’s $8B Backlog Challenge?

Solar is a high-growth industry, and several companies have entered the space in which NEXTracker operates. This has led to increased competition for NEXTracker. Although the company has successfully maintained its status as an industry leader, it must continue driving innovative technologies into the market and manage its growing backlog to continue its dominance. NEXTracker has a backlog of $4.5 billion, and management forecasts an 80% increase to $8 billion over the next eight quarters. Although backlogs provide insight into the future and signal the potential for robust growth, they also create risks. With high consumer demand, NEXTracker must be able to meet consumer demands quickly, ensuring customers are satisfied and continue to order their product. Management must also ensure production is efficient and costs are not rising; production disruption could threaten the company's ability to fulfill its backlogs and ruin its growth trajectory. To mitigate these risks and drive sales growth while keeping costs low, the company's management has continued expanding partnerships, material sourcing, and manufacturing facilities globally, tying facility location to demand.

Prepared for a Solar Boom: NEXTracker’s Global Expansion:

NEXTracker's strong leadership has been capitalizing on increased solar demand worldwide. The company has experienced a growing global customer base and has implemented a robust supply chain to accommodate the increased demand. For instance, in India over the next 5 years, the solar industry is expected to experience a compound annual growth rate (CAGR) of 15%. NEXTracker is well-positioned to benefit from this growth, as all its orders in India include raw materials that are locally sourced and used in the final product that is also produced entirely in local manufacturing facilities. The company is also well-positioned in Canada, which is expected to experience a CAGR of 23% over the next 5 years. NEXTracker is the dominant solar tracking technology supplier in Canada. These are just a few examples of NEXTracker's global reach as the solar tracking industry leader. The map below displays the company's significant operations and partnerships on five of the seven continents.

Acquisitions, and Cost-Cutting: NEXTracker’s Strategy for Continued Dominance:

NEXTracker has maintained market dominance through significant research and development spending and strategic acquisitions of companies that can maximize technological synergies while helping to cut costs. In 2024, NEXTracker acquired two companies:

Ojjo – Developed Specialized technology that makes installing steel pipe foundations more efficient, with less drilling required on hard, rocky terrain. With this acquisition, NEXTracker expects a cheaper, more efficient installation process, as they no longer need to dig deep to set steel foundations, decreasing the amount of custom steel piping required.
Solar Pile International – Developed specialized piling technology, which includes special steel beams that allow solar farms to be solidly built and integrated on weakened soil or terrain.

These strategic acquisitions have been pursued to cut costs, gain access to more specialized technologies, and decrease any limitations the business might have had when building on unreliable terrain.

Cashing In on the Sun: Why I See NEXTracker at $70:

With a strong global market presence and proprietary technology, NEXTracker stands to benefit significantly from increased solar energy demand. Due to the company’s industry dominance, strong global positioning, rapid growth, and the following valuation, I am placing a $70 price target on the business, signaling 40% upside from current levels of $50 per share. During the Discounted Cash Flows (DCF) valuation process, I used a CAGR of 10% for revenues over the next 5 years, a Long-Term Growth Rate (LTGR) of 3%, and calculated a Weighted Average Cost of Capital (WACC) of 13.14%. This led to a $67 per share valuation, a 35% increase from the current share price of $50. Using First Solar, I also performed a P/E multiple valuation model, which returned an implied share price of $66 per share, agreeing with the DCF model.

NEXTracker is well-positioned for the future with strong financials as the foundation. The business is experiencing significant demand, as revealed by rapidly increasing backlogs. To accommodate and continue market strength, the company has developed a strong global supply chain, backed by globalizing manufacturing facilities and partnerships with suppliers.

I look forward to keeping an eye on NEXTracker's future growth and management's strategy as the company continues to expand its market strength while managing growing backlogs.

Sensitivity Analysis

For further questions regarding the valuation process, please refer to the Excel

spreadsheet below:

References

Nextracker Q! FY25 Shareholder letter. (2024, August 1). https://s202.q4cdn.com/187110589/files/doc_financials/2025/q1/Nextracker_Q1_FY25_Shareholder_Letter.pdf

Nextracker. Canadian Renewable Energy Association. (2025, January 30). https://renewablesassociation.ca/leading-member/nextracker/#:~:text=Nextracker%20is%20the%20leading%20provider,to%20date%2C%20Travers%20Solar%20Project.

Yahoo! (n.d.). Solar Energy Market in Canada to grow by USD 2.25 billion (2025-2029), driven by government support, with market evolution powered by Ai - Technavio. Yahoo! Finance. https://finance.yahoo.com/news/solar-energy-market-canada-grow-064100107.html

Kala, R. R. (2025, May 6). India’s solar component market to grow at CAGR of 16% till 2029. BusinessLine. https://www.thehindubusinessline.com/economy/indias-solar-component-market-to-grow-at-cagr-of-16-till-2029/article69544006.ece

Singla, P. (2023, December 13). Nextracker India achieves 10 GW annual domestic manufacturing capacity to serve India’s rapidly expanding solar power market. Nextracker. https://www.nextracker.com/2023/10/nextracker-india-achieves-10-gw-annual-domestic-manufacturing-capacity-to-serve-indias-rapidly-expanding-solar-power-market/

Nextracker and Unimacts dedicate second Nevada factory to serve solar power demand. Nextracker Inc., Nextracker and Unimacts Dedicate Second Nevada Factory to Serve Solar Power Demand. (n.d.).

https://investors.nextracker.com/news/news-details/2024/Nextracker-and-Unimacts-Dedicate-Second-Nevada-Factory-to-Serve-Solar-Power-Demand/default.aspx#:~:text=The%20company%20has%20opened%20or,building%20a%20renewably%20powered%20future.

Nextracker stock: Backlog growth creates future visibility (NASDAQ:NXT) | seeking alpha. (n.d.). https://seekingalpha.com/article/4770780-nextracker-backlog-growth-creates-future-visibility

Nextracker’s SWOT analysis: Solar Tracker Leader Faces Growth, policy challenges by investing.com. (n.d.-b). https://www.investing.com/news/swot-analysis/nextrackers-swot-analysis-solar-tracker-leader-faces-growth-policy-challenges-93CH-3810667

Disclaimer: This is not financial advice; please perform your own research and due diligence before making investment decisions.