Array Technologies stock rises after announcing acquisition of APA Solar

Array Technologies (ARRY) is acquiring APA Solar for $179 million, a move expected to expand Array’s addressable market by nearly 40% and be accretive to adjusted EPS within the first year. The acquisition, valuing APA at 7.6x trailing EBITDA (excluding 45X credits), will allow Array to offer integrated tracker and foundation systems and expands U.S. manufacturing capabilities. Oppenheimer reiterated an Outperform rating on ARRY, citing APA's capabilities in challenging terrains and fixed-tilt solutions, creating a one-stop shop for developers.

Analysis

Array Technologies (NASDAQ:ARRY) stock increased 2.8% following the announcement of its $179 million acquisition of APA Solar, a provider of engineered foundation solutions and fixed-tilt mounting systems. This strategic move is projected to expand Array's total addressable market by nearly 40% and is expected to be accretive to adjusted earnings per share in its first year, excluding synergies. The deal values APA Solar at approximately 7.6 times its trailing 12-month EBITDA (excluding 45X credits), based on APA's 2024 generation of roughly $129 million in revenue and $25 million in EBITDA (excluding 45X credits). The acquisition will allow Array to offer an integrated tracker and foundation system, addressing challenging soil conditions, and broaden its U.S. manufacturing footprint with APA's Ohio facility, enhancing eligibility for domestic content incentives. Oppenheimer reiterated an Outperform rating and a $13.00 price target on Array, citing APA's capabilities in difficult terrains and the addition of fixed-tilt solutions, transforming Array into a 'one-stop shop' for ground mount infrastructure. APA’s senior management, including its CEO and COO, will remain to lead Array’s new Foundation Solutions Business. The transaction is anticipated to close in the third quarter of 2025, contingent upon regulatory approval and customary closing conditions, while an InvestingPro AI analysis noted ARRY was not a top-ranked undervalued stock.

Key Decisions for Investors

• Investors should recognize the APA Solar acquisition as a significant strategic enhancement for Array Technologies, potentially improving its competitive standing, product diversification, and access to projects in challenging terrains.
• The projected EPS accretion and expansion of U.S. manufacturing capabilities, which align with domestic content incentives, are key positive financial and operational factors to consider, pending successful integration post-Q3 2025 closing.
• While the acquisition and analyst outlook are positive, investors should balance this with broader valuation assessments, noting that some AI-driven analyses indicate Array Technologies may not be deeply undervalued, thereby warranting continued due diligence.