Sunnova Energy (NOVA) seems poised to take advantage of the growing adoption of green energy. The company’s recent Q2 results hint at its exciting potential – beating earnings estimates and reporting a healthy 32% year-over-year jump in revenue. Moreover, the company made positive adjustments to its outlook for 2024 and onwards, and Wall Street analysts have collectively raised their price targets on the stock, adding to the bullish sentiment.
The stock has been up over 139% in the past 90 days, with potential room to run, making it a strong candidate for consideration for investors seeking exposure to the ever-growing green wave.
Sunnova’s Turbocharging Growth
Sunnova is a player in the energy sector, providing solar and energy storage services. The company operates nationwide and offers a comprehensive service range, including operations and maintenance, monitoring, repair and replacement of equipment, equipment upgrades, on-site power optimization, and diagnostic services for solar energy and energy storage systems.
The company’s operations boast a formidable fleet of residential solar energy systems, demonstrating a generation capacity of approximately 2,292 megawatts. This output enables the company to support over 419,000 customers.
The company recently established an exclusive partnership with The Home Depot (HD), making it the sole solar and battery storage service provider at Home Depot stores across the U.S. and its territories. This partnership makes its Adaptive Home energy services available at over 2,000 locations.
Sunnova’s Recent Financial Results & Outlook
The company has recently announced its Q2 2024 results. Revenue was $219.6 million, marking a year-over-year increase of $53.2 million, though it was slightly lower than the analyst-projected $221.89 million. This growth was generated primarily through a significant $55.9 million increase from core adaptive energy customer services. However, this was somewhat offset by $5.4 million in reduced direct sales revenue.
Operating expenses rose to $278.5 million, and adjusted operating expenses increased to $108.8 million. Despite this, Sunnova’s net loss reduced from $100.8 million in Q2 2023 to $79.7 million. Adjusted EBITDA rose to $216.7 million, a notable year-over-year improvement from $28.1 million. Earnings per share (EPS) came in at -$0.27, beating analysts’ expectations of -$0.59.
Sunnova announced that its total cash reserve was $630.4 million as of the quarter’s end. This comprised $253.2 million of unrestricted cash and $377.1 million of restricted cash.
Following second-quarter results, NOVA’s management has offered revised guidance for 2024, projecting Adjusted EBITDA ranging from $650 million to $750 million. The company also anticipates its interest income and the primary proceeds from customer notes receivable, minus revenue-recorded amounts, along with proceeds from investments in solar receivables, to be within $115 million to $125 million and $180 million to $190 million, respectively. These updated figures reflect recent sales of non-solar loans and a faster-than-anticipated shift to leases and PPAs.
What Is the Price Target for NOVA Stock?
The stock has been on a volatile downward ride, sporting a beta of 2.85 as it shed 70% over the past three years. It trades near the middle of its 52-week price range of $3.37 – $16.36 while showing positive price momentum by trading above its 20-day (9.19) and 50-day (7.83) moving averages. After the recent run-up in share price, the stock now trades in line with industry peers, reflected by its P/S ratio of 1.7x compared to the Solar industry average of 1.6x.
Analysts covering the company have been bullish on the stock. For instance, Morgan Stanley (MS) analyst Andrew Percoco recently raised the price target on the shares from $11 to $13 while reiterating an Equal Weight rating. He noted that the outlook for distributed solar is improving, spurred by improved subsidy support, rising utility power prices, and potentially lower interest rates.
NOVA stock is rated a Strong Buy based on the recent recommendations and price targets assigned by 15 analysts. The average price target for NOVA stock is $12.38, representing a potential 14.63% upside from current levels.
Sunnova in Summary
Sunnova Energy has emerged as a promising opportunity for investors looking to participate in the burgeoning renewable energy trend. The company has witnessed exceptional growth recently, and its strategic partnerships and comprehensive service range further cement its credibility as a reliable investment option. Sunnova looks well-positioned to rise with the tide as the momentum toward cleaner energy accelerates. Whether you’re an ESG investor looking to support the environment or simply aim to capitalize on this profitable sector, NOVA stock is a compelling option worthy of consideration.
