UBS analysts initiate coverage for the Texas-based solar panel company Sunnova (NOVA). Yahoo Finance’s Jared Blikre takes a closer look at rising oil prices and the overall outlook for energy sector stocks.
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Video Transcript
BRAD SMITH: Sunnova. Shares in Texas-based solar power company, Sunnova Energy, pushing higher this morning. UBS initiating coverage of the business with a buy rating and a $16 price target. Good news in the sector has been hard to find as solar stocks have had a tough ride lately thanks largely to higher interest rates policy. And that is weighing on demand for sure here.
I wanna bring back in Jared because, Jared, some of the catalysts here that were cited in this note, particularly the ongoing release of state-level solar panels-- solar approvals data and then additionally new installations here as well. You're taking a look at some of these energy names here on the data.
JARED BLIKRE: Yeah, besides the peculiarities of one particular player in the energy market, especially the alternative energy market, a lot of what happens in energy comes down to the price of crude oil. And so I just wanted to track that real quickly.
Let's see if we can pull off some of these Knight quotes and just get a pure look at what's happening inside the market here at some of the futures. But crude oil WTI just hit a handle of about $93. And here we're looking it's up about 20 basis points. Here's the overnight price action.
But when we take a look at the year to date, pretty clear that's been trending up over the last two months. And that is in the light of the fact that the dollar has also been trending higher. And as Farrah was talking about this a little bit earlier, there's kind of a virtuous-- or maybe it's nonvirtuous circle of higher oil which is priced in dollars attracts dollars. And so both of those can be bid up at the same time at this point in the business cycle.
Oil tends to spike later than everything else. It tends to spike and top out later than stocks, for instance, once the Fed is rolling over. And not to get ahead of myself to say that we're in that point just yet. We're kind of looking at the Fed standing pat. But that is what is expected to happen because it happens historically. I think it was to late 2007 the global financial crisis that oil topped $150 per barrel. And that was the all-time high.
So just taking another look at the sector action here. It looks like energy is settled into a 14 basis point loss here. And what we're seeing is tech, tech is emerging along with communication services in the lead. And let's take a look at the megacaps because some of those sectors are represented here. NVIDIA, which is representing tech and Apple, each of those up more than 1%. Apple just barely there.
Alphabet is representing communication services. And that's up 1%. Tesla, which is in the consumer discretionary camp, along with Amazon, that is down 2%. So some exception to begin the week and the megacaps but a little bit of a turnaround so far because a lot of these names were in the red when we opened up just a few minutes ago, guys.
