Piper Sandler upgrades solar stocks to 'Overweight'

Piper Sandler has shifted it's stance on solar stocks, upgrading their ratings on both Sunrun Inc. (RUN) and Sunnova Energy (NOVA) from "Neutral" to "Overweight" Monday morning. The firm cited the Federal Reserve's indication of pausing interest rate hikes as an "undoubtedly positive" catalyst for the solar sector in the year ahead.

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Video Transcript

SEANA SMITH: All right. Let's talk about another sector here that's on the move. Piper Sandler bullish on solar stocks, upgrading both Sunrun and Sunnova from Neutral to Overweight this morning. The firm saying that the Fed's pivot is, quote, undoubtedly positive for the solar stocks, but warns that investors-- that it's ex machina here for all the challenges faced in 2023.

You talk about some of those drivers here. And this note from Piper Sandler very similar to the note that we talked about earlier about Jefferies, or calling from Jefferies, saying that these solar stocks are among the best positioned of the group. It's going to be key theme for solar stocks this year, when we talk about the Fed cutting rates. These are names that have been beaten down this year, when you take a look at the two names on your screen, Sunrun and Sunnova. Both of those shares off just about 25% since the start of the year. But Piper Sandler making the argument, along with Jefferies, that the sector's positioned very well heading into the new year, and what we're expected to see from the Fed.

BRAD SMITH: I mean, there's been a ton of-- dare I say in the bad pun category. A ton of shine that a lot of these solar stocks have been catching, as of recently. You think about what JP Morgan had already said-- Goldman Sachs, even recently this week, had looked at some of their solar coverage here. And I believe they had moved Sunnova to ABI. They're upgrading them.

And then additionally, SunPower. Well, they moved them to a cell. So at the end of the day, I think for a lot of the solar plays that have been starting to initiate here, everything ranging from what it could be for residential firms who are continuing to invest in some of these solar plays trying to woo potential buyers back into the market off of a more environmentally conscious, or environmentally sustainable household, or even kind of business structure, that is some of the reasoning that we've seen come forward. But these stocks have certainly benefited over the course of this week because of some of the more bullish tenor that has started to initiate around all of these solar names right now.