Sunnova downgraded by BMO

Analyst Ameet Thakkar, from BMO, has lowered his rating on Sunnova to market perform from outperform. He also trimmed his price target on shares to $25 from $27. The new price target implies 10.7% upside from Thursday’s close.

Outperformance in 2023

Despite challenging market conditions, Sunnova has outperformed both the Invesco Solar ETF and the S & P 500 in 2023. Sunnova shares are up 25%, while the fund has lost 2%. The S & P 500 is up 18% year to date.

Challenges in the residential solar market

“We remain constructive on NOVA and residential solar growth in the U.S. longer-term. That said, the macro backdrop for U.S. residential solar remains challenging,” Thakkar wrote in a Friday note.

Thakkar noted that dealer growth has allowed Sunnova to add customers despite less overall demand for residential solar power. However, he cautioned that this impact may wane over time. With the increase in Sunnova’s dealer network, the growth per dealer is expected to decrease.

Additionally, Thakkar expressed concern about the company’s debt issuances. Sunnova has issued approximately $1.7 billion in asset-backed securities (ABS) since 2022. The increase in Treasury yields could weigh upon the stock.

Upcoming quarterly earnings

Sunnova is scheduled to report its quarterly earnings next week. Investors should keep an eye on the company’s performance.

— AsumeTech’s