Array Technologies, Inc.

ARRY Details

ARRY Closes Secondary Offering: Array Technologies, Inc.  (NASDAQ: ARRY) is engaged in manufacturing ground-mounting systems that are utilized in solar energy projects. The market capitalization of the company stood at ~5.47 billion as on 21 December 2020. Recently, ARRY stated that it has closed its previously announced secondary offering by a parent entity of ARRY, controlled by Oaktree Capital. The offering entailed 36,656,250 shares of the company’s common stock sold by Oaktree Capital. The offering also included 4,781,250 shares of the common stock subsequent to the exercise in full of the underwriters’ option to purchase additional shares at a price of $35.00 per share.

Key Financial Highlights for the Nine Months Ended September 30, 2020: During the period, revenues came in at $692.1 million, up 64% year over year, owing to a higher volume of trackers delivered.   Gross profit during the period went up by 86% and came in at $167.3 million, driven primarily by higher revenues.  Operating expenses increased from $47.3 million from the year-ago period to $69.9 million, owing to non-cash charges along with professional fees associated with recapitalization and an initial public offering. During the period, adjusted net income came in at $93.4 million, a rise of 116% year over year. Adjusted EBITDA rose 96% to $140.5 million, during the period. The company exited the period with a cash balance of $27.1 million.

Key Financial Highlights (Source: Company Reports)

Outlook: For FY20, the company expects revenues to be in the range of $845 million to $865 million. Adjusted EBITDA is likely to be between $156 million to $160 million. Adjusted net income per share is expected to be in the ambit of $0.82 to $0.86.

Valuation Methodology: P/E Multiple Based Relative Valuation (Illustrative)

P/E Multiple Based Relative Valuation (Source: Refinitiv, Thomson Reuters)

Note: All forecasted figures and peers have been taken from Thomson Reuters, NTM-Next Twelve Months

Stock Recommendation: The stock is currently trading above the average of its 52-week low and high level. The stock went down ~4.5% in the last one-month period. On a technical analysis front, the stock has a support level of ~$40.12 and a resistance level of ~$45.72. Considering the above factors, we have valued the stock using a P/E multiple based illustrative relative valuation method and arrived at a target price with an upside of lower double-digit (in % terms). For the purpose, we have taken peers like we have taken the peer group - First Solar Inc (NASDAQ: FSLR), Enphase Energy Inc (NASDAQ: ENPH), to name a few. Hence, considering the decent quarterly performance, modest outlook, low debt to equity ratio and capital raising program, we give a “Buy” rating on the stock at the closing price of $43.08, up by 2.57% on 21 December 2020. 

ARRY Daily Technical Chart (Source: Refinitiv, Thomson Reuters)

Innovative Industrial Properties, Inc.

IIPR Details

IIPR Wraps up Acquisition of Properties:  Innovative Industrial Properties, Inc. (NYSE: IIPR) is a real estate company that is dedicated to the acquisition, ownership, and management of specialized industrial properties to regulate medical-use cannabis facilities. Recently, the company completed the acquisition of a property in Georgetown, MA, and property in Olympia, WA, in an attempt to expand its portfolio and invest in the healthy market fundamentals. Notably, the property comprises 181,000-square-foot industrial space in total.

IIPR Declares 4QFY20 Dividend: In another update, the company stated a 6% hike in its 4QFY20 dividend to $1.24 per share, as compared to $1.17 paid in the prior quarter. This also signifies a 24% rise in pcp. The latest increase is equal to a dividend of $4.96 per share on an annual basis and will be paid on January 15, 2021.

3QFY20 Key Highlights: During the quarter, the company reported an increase of 197% in its total revenues, which came in at $34.4 million, owing to the acquisition and leasing of new properties, additional tenant improvement allowance and contractual rental escalation of certain properties. Net income during the quarter came in at $18.9 million, up 205% year over year, whereas adjusted funds from operations (AFFO) stood at $27.9 million, up 192% from the prior corresponding period. The company exited the period with a cash balance of $161.1 million.

Key Financial Highlights (Source: Company Reports)

Valuation Methodology: P/E Multiple Based Relative Valuation (Illustrative)

P/E Multiple Based Relative Valuation (Source: Refinitiv, Thomson Reuters)

Note: All forecasted figures and peers have been taken from Thomson Reuters, NTM-Next Twelve Months

Stock Recommendation: The stock is currently trading close to its 52-week high of $193.08. The stock went up ~27% in the last one-month period. On a technical analysis front, the stock has a support level of ~$184.7 and a resistance level of ~$193.7. The company is likely to witness continued growth in the industry and increasing momentum towards the legislation of medical use of cannabis under state law. Considering the above factors, we have valued the stock using a P/E multiple based illustrative relative valuation method and arrived at a target price with an upside of lower double-digit (in % terms). Hence, considering the strong quarterly performance, acquisition synergies enhancing shareholder’s value via dividend and decent liquidity position, we recommend a “Hold” rating on the stock at the closing price of $192.98, up by 2.35% on 21 December 2020. 

IIPR Daily Technical Chart (Source: Refinitiv, Thomson Reuters)

Disclaimer

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