Nextracker is the IBD Stock of the Day, as the provider of solar energy equipment launched a head-turning initial public offering last month that exceeded expectations.
NXT stock jumped 4.6% to close at 33.35 on the stock market today.
Nextracker makes solar power tracker systems used to maximize the performance of large-scale utility systems. Trackers redirect solar panels throughout the day so they continuously align with the sun at an optimal angle.
The company reported $1.45 billion revenue in 2022, up 22% from the prior year, according to the Nextracker IPO filing. Nextracker earned 34 cents per share, down from 2021's 84 cents a share profit.
Largest IPO Since Mobileye
Led by JPMorgan and BofA Securities, the NXT stock IPO on Feb. 8 raised $638.4 million, making it the largest initial offering since Mobileye went public in October. Founded in 2013, Nextracker is based in Fremont, Calif.
At its IPO, the company sold 26.6 million shares at 24, above the expected range of 20 to 23. Shares popped 27% on the first day of trading, and closed at 30.46.
The largest comparable IPO to NXT stock was Array Technologies, which also makes solar trackers. Array, too, managed a head-turning IPO in October 2020 that raised $1 billion.
Array offered 47.5 million shares at $22, above the range of $19 to $21. ARRY stock popped 66% on the first day of trading. Array currently trades near 20.35.
Nextracker is a subsidiary of San Jose, Calif.- based Flex, which now owns 66% of Nextracker shares after the IPO.
NXT Stock Is An IPO Leader
The company was selected as the IPO Stock Of The Week on Feb. 2 and is also on the IBD IPO Leaders' stock screen.
Annual earnings are expected to jump 144% in 2023 and another 37% in 2024, according to FactSet.
NXT stock is breaking out from an IPO base after consolidating since it hit a new high at 32.95 on Feb. 16. Friday afternoon, the stock was extended from a buy zone that goes to 34.70.
When investing in IPO stocks, new issues don't play by the usual rules.
IPOs often draw a lot of investor attention. That can create results in unusual chart patterns. Volatility can rise as investors size up demand for the new stock. Yet there are opportunities in these cases, if you can spot the correct characteristics.
In a good IPO base, the decline from peak to trough usually doesn't top 20%, but highly-volatile markets can produce declines of up to 50%. The length is often less than five weeks and can be as short as seven days.
Please follow Brian Deagon on Twitter at @IBD_BDeagon for more on tech stocks, analysis and financial markets.
