RBC Illuminates Solar Sector, Launches Coverage For 4 Solar Equipment Leaders

RBC Capital Markets highlighted favorable public policy and declining costs within the solar industry and initiated coverage on several solar equipment suppliers on Tuesday. Here's a look at the details. 

Solar Equipment Suppliers: RBC analyst Christopher Dendrinos initiated coverage on First Solar Inc. FSLR with an Outperform rating and a $195 price target. Dendrinos pointed to First Solar's future revenue and noted the company is sold out through 2026 (excluding India) and contracting sales for 2027.

The RBC analyst also noted First Solar maintained a dominant position in the utility-scale domestic market with opportunities to grow both domestically and internationally. 

RBC also initiated coverage on Enphase Energy Inc. ENPH with a $140 price target for the stock. RBC highlighted Enphase as the leader in the U.S. residential market with a more than 50% market share of residential home inverters. Dendrinos believed Enphase created a competitive moat with its technology and distributor network that will enable the company to maintain its domestic market share and expand in the European market. 

Enphase's next microinverter, the IQ9, will be incorporated throughout the company's product line, and the RBC analyst predicted it will reduce costs across Enphase's portfolio and potentially contribute to market expansion for the company. 

Related News: Enphase Energy Q4 Performance: Revenue Shortfall, Subpar Outlook And More

RBC initiated coverage on SolarEdge Technologies Inc. SEDG with a Sector Perform and a price target of $85. Dendrinos highlighted SolarEdge as the leading supplier of residential rooftop solar inverters in Europe, however, decreased European demand has been a source of recent revenue weakness for the company.

The RBC analyst noted SolarEdge increased the capacity of its power optimizers and inverters which provides the company with exposure to the commercial and industrial market and an opportunity in the utility-scale solar market. 

Lastly, RBC initiated coverage on Shoals Technologies Group, Inc. SHLS with an Outperform and a price target of $20 which could appeal to investors looking for solar industry exposure at a lower entry.

Dendrinos pointed to Shoals expanding its target customer base to include smaller projects and higher-growth markets in Europe, Africa and South America as a large growth opportunity for the company. 

Overall, RBC sees the solar industry continuing to benefit from strong regulatory support, decarbonization initiatives and an improving interest rate environment. 

FSLR, ENPH, SEDG, SHLS Price Action: According to Benzinga Pro, First Solar shares were up 3.87% at $158.24, Enphase Energy shares up 6.52% at $131.62, SolarEdge shares up 7.92% at $82.61 and Shoals Technologies shares up 4.64% at $16.24 at market close Wednesday.

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