Why ARRY Could Reach $10 in 2025: A Comprehensive Analysis

As we move into 2025, the renewable energy sector continues to gain momentum, fueled by global decarbonization goals, government incentives, and growing private investment. Among the key players in this transition is Array Technologies (NASDAQ: ARRY), a leading provider of utility-scale solar tracking solutions.

Currently trading below its highs, ARRY presents a compelling opportunity for investors aiming to capitalize on the renewable energy boom. In this article, we’ll explore why ARRY could realistically reach $10 per share in 2025, backed by industry trends, financial performance, and company-specific catalysts.

1. The Renewable Energy Tailwind

Global renewable energy demand is projected to grow significantly in the next decade. According to the International Energy Agency (IEA), solar photovoltaic (PV) installations are expected to account for 60% of the growth in renewable capacity between 2023 and 2030. Utility-scale solar—where ARRY operates—is a cornerstone of this expansion due to its cost efficiency and scalability.

ARRY’s single-axis solar tracking systems, which improve energy output by up to 25%, are critical for maximizing the efficiency of these large-scale projects. As governments and corporations ramp up their commitments to net-zero emissions, ARRY’s products are well-positioned to meet the demand for cost-effective, high-performance solar solutions.

2. Federal Support for Clean Energy

In the U.S., the Inflation Reduction Act (IRA) of 2022 has earmarked $369 billion for renewable energy incentives over the next decade. This includes tax credits for utility-scale solar projects, which directly benefit companies like ARRY. The act also prioritizes domestic manufacturing and supply chains, creating opportunities for ARRY to strengthen its market position by sourcing materials and producing components locally.

ARRY’s focus on the U.S. market, combined with its ability to scale globally, ensures that it remains a key beneficiary of these federal incentives. By 2025, the full impact of these policies is likely to materialize, translating into robust growth for ARRY’s revenue and margins.

3. Strong Financial Performance and Cost Optimization

Despite facing supply chain challenges in recent years, ARRY has demonstrated resilience by optimizing its operations and improving profitability. In its latest quarterly report, the company posted revenue growth of over 20% year-over-year, alongside a significant improvement in gross margins.

ARRY has also implemented cost-saving measures, including better inventory management and supplier diversification, which position it to sustain profitability even in a competitive market. By 2025, these efforts are expected to enhance operating leverage as economies of scale kick in, driving higher earnings and investor confidence.

4. Market Leadership and Technological Innovation

ARRY is one of the largest solar tracker manufacturers globally, with a strong reputation for reliability and performance. Its partnerships with leading renewable energy developers give it a competitive edge in securing large-scale projects. Moreover, ARRY’s continuous investment in R&D ensures that it remains at the forefront of technological innovation.

The company’s recent launch of advanced tracker systems with integrated software for real-time performance optimization underscores its commitment to delivering value-added solutions. These innovations not only differentiate ARRY from competitors but also enhance the long-term return on investment (ROI) for its customers, making it a preferred choice in the industry.

5. Expanding Global Footprint

While the U.S. remains ARRY’s primary market, the company has been actively expanding its presence in international markets such as Latin America, Europe, and the Middle East. These regions are witnessing rapid adoption of solar energy, driven by favorable policies and abundant solar resources.

For instance, in Latin America, countries like Brazil and Chile are investing heavily in solar infrastructure. ARRY’s ability to deliver customized solutions for diverse climatic conditions positions it as a partner of choice in these emerging markets. By 2025, international revenues could account for a significant share of ARRY’s total sales, further boosting its growth trajectory.

6. Valuation and Upside Potential

ARRY’s current valuation, trading at a significant discount to its historical multiples, reflects market concerns over short-term challenges like supply chain disruptions and interest rate hikes. However, these headwinds are transitory and are expected to ease as global economic conditions stabilize.

At a price target of $10, ARRY would be valued at a forward price-to-earnings (P/E) multiple of around 15x, assuming projected earnings growth of 25-30% annually. This valuation is well within reach, given the company’s strong growth prospects and improving profitability metrics.

Risks to Consider

While the outlook for ARRY is promising, investors should be mindful of potential risks, including:

• Competition: The solar tracker market is competitive, with players like Nextracker and Soltec vying for market share.
• Macroeconomic Factors: Rising interest rates and inflation could impact the financing of utility-scale projects.
• Execution Risks: Delays in project timelines or cost overruns could affect ARRY’s financial performance.

That said, ARRY’s proactive measures to address these challenges mitigate much of the downside risk.

Conclusion

ARRY is uniquely positioned to capitalize on the growing demand for renewable energy, supported by favorable industry trends, robust government incentives, and its own operational strengths. With a strong balance sheet, market leadership, and a focus on innovation, ARRY has the potential to deliver substantial returns to investors.

While no investment is without risk, the combination of macroeconomic tailwinds and company-specific drivers makes $10 per share a realistic target for ARRY in 2025. Investors with a long-term perspective should consider ARRY as a cornerstone in their renewable energy portfolios.

Disclaimer

I am long on ARRY and currently hold shares of the company. This article is for informational purposes only and should not be considered financial advice. Always perform your own research before making investment decisions.