Deutsche Bank downgrades SolarEdge, Sunrun, Sunnova
Shares of Sunnova Energy (NOVA), Sunrun (RUN), and SolarEdge (SEDG) are all trading in the red Friday morning. Deutsche Bank downgraded all three of the solar stocks to "Hold" from "Buy," amid slowing demand in the United States and Europe.
Yahoo Finance's Seana Smith and Brad Smith discuss Deutsche Bank Analyst Corinne Blanchard's note on the solar companies and headwinds they are facing. For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.
Video Transcript
SEANA SMITH: Shares of Sunrun, SolarEdge, and Sunnova shares are all under significant amount of pressure. Now, when it comes to some of the reaction that we're getting from the street, Deutsche Bank downgrading all three solar stocks from buy to hold as demand in the US and also in Europe softens. The firm cutting both SolarEdge's and Sunnova's price target in half. They slashed Sunrun's price target from $27 a share down to $15.
And this move here that we're seeing play out in stocks and also what we're seeing the reaction here from analysts on the Street comes after SolarEdge warned just about canceled and delayed orders, specifically the softness that they're seeing over in Europe and how they see that impacting their business down the line.
And I also think it just points to the broader issue, right? Inventories beginning to pile up at some of these companies. You take a look at the broader macroeconomic picture right now, consumers pulling back on spending, not necessarily spending on some of these solar investments. And it's a trickle down effect clearly having an impact on some of these names.
BRAD SMITH: This is a huge call from Analyst Corinne Blanchard who must have taken a sip of her coffee, slammed it down and said, send. And ultimately the street responding here to this note. You think about what she had to say, though, believing third quarter 2023 earnings is gonna be another setback for the solar industry, sluggish demand, she said, on the US residential side, further signs of weakness in some key European markets, and then additionally here, believing it's gonna take another six to nine months until they see improvements and a potential recovery into the second half of 2024.
And so all that considered here, you're seeing this move really reflected as a result of this note for SolarEdge, for Sunnova, and Sunrun here. And this is also a business that's gonna be extremely sensitive to a interest rate environment here. The three names here have also been hit over the course of this year given that rising interest rate environment, some of that playing into this call here that's also taking place from the Analyst Corinne Blanchard.
SEANA SMITH: And further pressuring out the broader sector here as we can see a number of the stocks here under some pressure today.
