Citi double downgraded Shoals Technologies to Sell from Buy with a price target of $5, down from $15, after analyzing potential outcomes ahead of the forthcoming initial determination of the company’s patent infringement case against Voltage. The infringement case has an initial determination slated for around July 12. The Commission Investigative Staff opinion on the case “skews the odds meaningfully against” Shoals, the analyst tells investors in a research note. The firm says that assuming no violation is found, increased competition should pressure the company’s gross margin into the mid-20% range, in-line with tracker margins. The stock should trade at an 6%-8% free cash flow yield, which is in-line with Citi’s updated $5 target, the firm adds.
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