Raymond James has begun coverage of Solaris Energy (SEI, Financial), assigning it an Outperform rating and setting a price target at $39. The firm considers Solaris Energy to be underestimated within its sector and observes that its market potential has grown. As a pioneer in the field, Solaris is recognized for its custom build-outs, the appealing mix of competitive pricing, rapid market entry, and future capability to expand service offerings related to its power solutions. The analyst believes these factors contribute to its long-term value.
Additionally, Raymond James anticipates that Solaris Energy will secure bookings for the remaining 20%-25% of its fleet. This completion could pave the way for Solaris to be acknowledged as a rated credit, which might significantly alter its capital structure.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 2 analysts, the average target price for Solaris Energy Infrastructure Inc (SEI, Financial) is $13.50 with a high estimate of $14.00 and a low estimate of $13.00. The average target implies an downside of 51.61% from the current price of $27.90. More detailed estimate data can be found on the Solaris Energy Infrastructure Inc (SEI) Forecast page.
Based on the consensus recommendation from 2 brokerage firms, Solaris Energy Infrastructure Inc's (SEI, Financial) average brokerage recommendation is currently 1.5, indicating "Buy" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
SEI Key Business Developments
Release Date: April 29, 2025
- Revenue: $126 million, a 31% increase from the prior quarter.
- Adjusted EBITDA: $47 million, a 25% increase from the prior quarter.
- Power Solutions Revenue: Generated from approximately 390 megawatts of capacity in Q1.
- Logistics System Activity: Up over 25% sequentially in Q1.
- Projected Q2 Power Solutions Activity: Expected to increase 13% sequentially to 440 megawatts.
- Projected Q3 Power Solutions Activity: Expected to increase 18% to approximately 520 megawatts.
- Projected Q2 Adjusted EBITDA: Between $50-55 million.
- Projected Q3 Adjusted EBITDA: Between $55-60 million.
- Joint Venture Capacity: Upsized to approximately 900 megawatts with a 7-year tenure.
- Total Operating Fleet: Expected to reach approximately 1,700 megawatts.
- Annual Run Rate Adjusted EBITDA Potential: $575 to $600 million on a consolidated basis.
- Net Annual Run Rate Adjusted EBITDA: $440 to $465 million, accounting for joint venture structure.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Solaris Energy Infrastructure Inc (SEI, Financial) reported strong performance from both its business segments, highlighting the complementary nature of its logistics and power solutions.
- The company announced an upsized joint venture agreement, increasing the commercial contract to approximately 900 megawatts with an extended tenure of 7 years, enhancing earnings visibility into 2033.
- SEI secured an additional 330 megawatts of generation capacity, demonstrating its ability to meet growing market demand despite a tight OEM supply chain.
- The logistics segment saw a 25% sequential increase in system activity, driven by new customer wins and the adoption of advanced technology offerings.
- The company continues to generate significant free cash flow, allowing it to reinvest in its growing power solutions segment and maintain a strong financial profile.
Negative Points
- The company is beginning to observe some operators delaying jobs or reducing activity in response to recent commodity price softness, which could impact future earnings.
- There are ongoing regulatory challenges for data centers, which could affect the power solutions business.
- The supply chain for power generation equipment is becoming increasingly tight, posing challenges for future capacity expansion.
- SEI's logistics segment may face a slowdown in oil-directed activity if commodity prices remain at or below current levels.
- The company faces potential tariff impacts, although it believes these can be mitigated through in-house manufacturing and cost management strategies.
