- Raymond James analyst Pavel Molchanov downgraded TPI Composites Inc TPIC to Outperform from Strong Buy and raised the price target to $28 (an upside of 39%) from $21.
- The analyst talks about The Inflation Reduction Act, which is set to be signed into law this week and comprises a grab-bag of "carrots" — the only kind of climate policies that can actually get through Congress.
- Molchanov mentions that TPIC ran up in response to the bill, even though it will take a long time before the bill's benefits show up in financials, and the magnitude of those benefits remains hazy.
- TPI is a company with a globally diversified sales mix. While there is no precise way to know what percentage of TPI's wind turbine blades are deployed in the U.S., the analyst thinks that it accounts for approximately one-third of revenue.
- Molchanov stated that the Production Tax Credit extension is certainly good news but hardly a game-changer from a demand standpoint.
- The analyst believes with the new incentive, the plant in Newton, Iowa, will restart operations. However, there is no timetable for doing so and no clarity on how much production can be expected.
- The good news is that TPI does not need to build anything "from scratch," but it will take time for the new incentive to begin contributing to profitability, stated the analyst.
- Price Action: TPIC shares are trading lower by 10.05% at $20.149 on the last check Tuesday.
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