Sunnova Energy receives downgrade from Morgan Stanley
Shares of Sunnova Energy International (NOVA) are trading lower on Tuesday morning as Morgan Stanley downgraded the company from Overweight to Equal Weight, slashing its price target to $14 per share. Morgan Stanley cited a large dislocation between NOVA's stock price and the value of the company's asset base, noting a less clear path to realizing that value in the next year.
Yahoo Finance Senior Business Reporter Ines Ferré joins the Live show to discuss the downgrade for the stock and increasing prices within the solar sector amid higher interest rates.
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Editor's note: This article was written by Nicholas Jacobino
Video Transcript
BRAD SMITH: We're taking a look now at shares of Sunnova after Morgan Stanley gets cautious on the stock. Here with more, and the details, we've got Yahoo Finance's Ines Ferré. Hey, Ines.
INES FERRÉ: Hey, Brad. And Sunnova makes money by leasing and loaning solar systems to residential customers. Now Morgan Stanley analysts downgraded the stock to equal weight from overweight, cut the price target to $14 per share. That's still about 130% upside from the current price.
With Morgan Stanley analysts saying that there's a large dislocation between Sunnova's stock price and the value of the company's asset base, but a less clear path to realizing that value in the next 12 months.
Now Sunnova, in its latest quarter, posted a deeper loss compared to the prior year. And solar systems, of course, have become more expensive in the face of higher interest rates. So there has been some difficulty, challenges, especially in the residential area, when it comes to solar system.
Sunnova recently announced a stock offering plan, but the CEO then came out and said, look, we're just-- it's just in case we aren't going to be tapping into that stock offering plan anytime soon. The company also is turning to automation to be able to grow without having to increase headcount and to keep those costs lower.
If we take a look at the stock today, it's down about 2%. But I want to show you a year to date where it's at, and you can see that it's down about 55% year to date. You saw this big fall here. This is after they announced that stock offering plan.
Over a one-year period, you can see that the stock is also down about 63%. So yes, it's been difficult for these renewable energy companies in the face of this higher interest rates, especially if they stay here for longer, guys.
