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Earnings Update: Here's Why Analysts Just Lifted Their Sunnova Energy International Inc. Price Target To US$21.75

Simply Wall St
·4 mins read

Sunnova Energy International Inc. (NYSE:NOVA) shares fell 6.3% to US$16.73 in the week since its latest full-year results. It was a pretty bad result overall; while revenues were in line with expectations at US$132m, statutory losses exploded to US$4.14 per share. Earnings are an important time for investors, as they can track a company's performance, look at what top analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether analysts have changed their mind on Sunnova Energy International after the latest results.

View our latest analysis for Sunnova Energy International

NYSE:NOVA Past and Future Earnings, February 28th 2020
NYSE:NOVA Past and Future Earnings, February 28th 2020

Taking into account the latest results, the latest consensus from Sunnova Energy International's seven analysts is for revenues of US$166.8m in 2020, which would reflect a major 27% improvement in sales compared to the last 12 months. Statutory losses are forecast to balloon 67% to US$1.36 per share. Yet prior to the latest earnings, analysts had been forecasting revenues of US$165.4m and losses of US$0.85 per share in 2020. So there's definitely been a decline in analyst sentiment after the latest results, noting the large cut to new EPS forecasts.

Despite expectations of heavier losses next year, analysts have lifted their price target 30% to US$21.75, perhaps implying these losses are not expected to be recurring over the long term. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values Sunnova Energy International at US$26.00 per share, while the most bearish prices it at US$18.00. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.

Further, we can compare these estimates to past performance, and see how Sunnova Energy International forecasts compare to the wider market's forecast performance. We can infer from the latest estimates that analysts are expecting a continuation of Sunnova Energy International's historical trends, as next year's forecast 27% revenue growth is roughly in line with 26% annual revenue growth over the past year. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 3.2% per year. So although Sunnova Energy International is expected to maintain its revenue growth rate, it's definitely expected to grow faster than the wider market.

The Bottom Line

The most obvious conclusion is that analysts made no changes to their forecasts for a loss next year. Happily, there were no major changes to revenue forecasts, with analysts still expecting the business to grow faster than the wider market. Analysts also upgraded their price target, suggesting that analysts believe the intrinsic value of the business is likely to improve over time.

Still, the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Sunnova Energy International analysts - going out to 2024, and you can see them free on our platform here.

You can also see whether Sunnova Energy International is carrying too much debt, and whether its balance sheet is healthy, for free on our platform here.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.