Investors are at a crossroads, grappling with the decision of which energy stocks to buy and which to discard.
Despite the persistent challenges facing the sustainability sector in the new year, analyst Jordan Levy of Truist Securities believes there may be potential for “meaningful upside opportunity” for the residential solar group as the Federal Reserve embarks on an interest rate cutting cycle. In contrast, Levy sees “incremental downside risk” for more nascent industries such as hydrogen and fuel cells, as he stated in a recent note.
Check out other analyst stock ratings.
Notable Rating Changes
- Uplifted the rating for Sunnova Energy International Inc NOVA from Hold to Buy, along with an increased price target from $10 to $18.
- Improved the rating for Enphase Energy Inc ENPH from Hold to Buy, while raising the price target from $85 to $145.
- Downgraded the rating for Bloom Energy Corp BE from Hold to Sell, accompanied by a decreased price target from $12 to $9.
The Sustainability Thesis: As the 2024 Presidential election looms, headline risk to the entire group is inescapable.
Levy elaborated, “We see more deeply engrained sectors such as utility-scale solar & biofuels carrying significantly less risk of policy reform vs. more nascent industries like Green Hydrogen.”
Despite current valuations languishing at multiyear lows, Levy pointed out, “this is the case not only for subgroups that have seen significant downward revisions in growth expectations like resi solar (~41% avg. discount to 5-yr avg), but in areas where growth has held up more favorably i.e. utility-scale solar.”
While some stocks trading at a discount are justified by financial challenges or distress, Levy contends that this broad valuation discount creates opportunities for upside in certain names, including Sunnova Energy International and Enphase Energy.
NOVA ENPH BE Price Action: Shares of Sunnova Energy International, Enphase Energy, and Bloom Energy had risen by 7.18% to $11.20, by 4.47% to $111.94, and by 0.95% to $12.19, respectively, at the time of publication Tuesday.
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