Analyst Downgrades Sunnova Energy Amid Challenging US Solar Market, Prefer Peers

BMO Capital analyst Ameet Thakkar downgraded Sunnova Energy International Inc NOVA to Market Perform from Outperform with a lowered price target to $25 from $27.

The analyst is bearish on challenging residential solar market in the U.S. and NOVA's significantly less exposure than its peers, who have an international presence.

Thakkar believes future additions in NOVA's dealer count (around 1,400 as of 1Q 2023) may yield less capacity growth per dealer.

The analyst believes residential solar stocks have sometimes weakened on news of debt issuances and is cautious that likely upcoming financings may weigh on the stock.

Nevertheless, Thakkar believes NOVA has the ability to continue to drive attractive customer growth across the interest rate cycle while maintaining contract margins. 

The analyst revised 2023 EPS estimate to $(1.54) from $(1.49) for 2023.

Price Action: NOVA shares are trading lower by 5.5% at $21.33 on the last check Friday.