Shoals Technologies Stock Dips Following A Proposed Offering to Terminate a Tax Settlement

Shoals Technologies Stock

Shoals Technologies Stock (SHLS:NSD) Analysis:

Last Closing Price: $23.30

Consensus Analyst Rating: Buy

12-Month Price Target: $29.29

Market CAP: $3.29 Billion

 

Shoals Technologies (SHLS:NSD) fell -17.1% on Thursday after the company disclosed plans for a 20M-share public offering, consisting of 2M shares sold by the company and 18M shares by entities affiliated with founder Dean Solon, as well as the imminent departure of CEO Jason Whitaker for health reasons.

Shoals (SHLS) “intends to exercise its TRA Termination Right and use the net proceeds from the offering to cover a portion of the TRA Termination Consideration, with the balance paid using cash on hand” in connection with the offering.

Jon Windham, an analyst at UBS, welcomes the termination of the “confusing” Tax Receivable Agreement, stating that it was an impediment to many investors buying the company and that “the removal of the TRA simplifies the SHLS story and will have a long-term beneficial impact on the SHLS value.”

According to Windham, the TRA “was a financial structure that contractually obligated SHLS to provide cash payments to the TRA owners (the founder and former shareholders) based on SHLS’ achieved tax savings from earlier corporate transactions.”

Shoals Technologies (SHLS) is “one of the most intriguing growth stories in solar and EV charging,” according to a study published on Seeking Alpha by Overlooked Opportunities. However, inventory building signals that too much capital is tied up, and gross margins could contract in the future.

 

Analyst Forecasts:

Oppenheimer Holdings targets up the Shoals Technologies stock price to $41.

JP Morgan & Company targets up the Shoals Technologies stock price to $35.

 

About Shoals Technologies Group Inc. (SHLS:NSD:

Shoals Technologies Group, Inc. provides electrical balance of system (EBOS) solutions for solar energy projects in the United States. It produces EBOS components, including cable assemblies, inline fuses, combiners, disconnects, recombiners, wireless monitoring systems, junction boxes, transition enclosures, splice boxes, wire management solutions, and IV curve benchmarking devices.

The company also sells EV Charging solutions for public and fleet electric vehicle charging stations; and EBOS systems. It sells its products principally to engineering, procurement, and construction firms that build solar energy projects and install electric vehicle charging stations. Shoals Technologies Group, Inc. was founded in 1996 and is headquartered in Portland, Tennessee.

 

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