Will solar energy stocks see the light in 2024?
Solar energy stocks have been hurting in 2023 amid higher interest rates and alterations to adoption incentives in states like California. Coming off of 2023 headwinds, analysts are now expecting solar stocks to rebound on increased solar panel installations in 2024.
Yahoo Finance’s Ines Ferré take a deep dive into the energy sector, breaking down solar energy forecasts from Citi and Morgan Stanley, and crude oil market outlooks going into an election year.
For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.
Video Transcript
BRAD SMITH: Solar stocks have gotten decimated this year amid high rates and razor thin margins and an important owner incentive change in California. But are these stocks oversold and bound to rally in 2024? Yahoo Finance's Ines Ferré here with more. Hey, Ines.
INES FERRE: Hey, Brad. Yeah, there have been headwinds this year for solar stocks. Part of that has to do with the higher interest rate environment. This makes projects much more expensive. So owners to front load also these costs for installation of solar power panels. That has been very expensive.
The other issue that the solar stock environment has faced is also in some areas of the world, a glut of panels coming from China. So you've got a bit of an oversupply. And then you also have that policy change in California, which you mentioned earlier this year, which are less incentives for owners of solar panels.
So how does this translate? Well, we have seen these stocks getting completely decimated. The global solar ETF is down about 40% year to date. And Citi recently wrote a note basically saying-- forecasting that you are going to see though in 2024 more installation of solar panels.
Citi also talking about SunPower, which is down about 70% year to date, Altus Power also down about 13% year to date. These are some stocks that they are saying is a buy. Morgan Stanley today upgraded for solar, talking about the IRA, the Inflation Reduction Act that is going to drive clean energy growth, and also talking about cost inflation in clean energy equipment going into 2024, guys.
- Ines, I can't let you go without talking about the oil moves. I've been obsessed with them all week. Prices bouncing back a bit, still on course for the longest run of losses in five years here. As the market is kind of weighing these OPEC+ cuts, whether or not that's gonna to continue, what do you anticipate the oil story headline being heading into 2024 when the price of oil is incredibly watched particularly by those in DC as we head into this election year?
INES FERRE: Yeah. And DC has been very happy, by the way, that the price of oil has been coming down, that the price of gasoline has been coming down. That's very, very important to voters. As far as where oil is going to be heading going into 2024, you've got some more bearish calls out there like Citi saying that oil is going to be in the low 70s by the end of next year, then you have some other analysts that are calling for oil around $80 a barrel.
But I think what will be very important is to watch OPEC+ and those cuts that they have announced, the deepening of cuts. The market does not believe that they will go through with all of the cuts that they have talked about because they see the deepening of cuts that were announced last week to be more voluntary in nature.
What's very interesting is what happened this year where you saw the supply squeeze, where you saw oil prices rallying in the third quarter of this year. And then you saw oil coming down. It's now at a seventh week of losses, heading towards that seventh week of losses.
So it's interesting that OPEC+ has really tried to keep a pricing floor on oil. They need oil to-- some of these countries need oil to be around $80 a barrel to fund their internal projects. But they haven't been able to do that. And so much of this has to do with supply, more supply in the market.
And then analysts are watching demand out of China. China is the largest consumer of energy. So if you see China slowing, as there have been signs of China slowing, then you will see an impact on oil prices to the downside.
