Shares of Sunnova Energy International (NOVA) haven’t performed well this year, down 17.4% over the past three months.
This downturn is destined to end soon because this stock holds relevant catalysts which could make the share price bounce back. Thus, I am bullish on this stock. (See NOVA stock charts on TipRanks)
Sunnova is a leading operator in the residential solar and energy storage services industry. From its headquarters in Houston, Texas, the company organizes the business and manages its sales network to serve customers who are located in the U.S. and its territories.
Q2 2021
In the second quarter of 2021, the company supplied residential solar services on a higher number of systems in service, making total revenue of $66.56 million. This figure represents a 55.6% year-over-year increase, and beat analysts’ projections by $7.4 million.
Though important, the growth couldn’t provide enough base to beat analysts on EPS.
The company’s net loss of $0.42 per share was worse than the net loss of $0.26 estimated by analysts.
Industry Outlook, Recent Acquisitions, Guidance
President Joe Biden is trying to take climate change seriously. The Infrastructure Investment and Jobs Act includes a multi-billion-dollar chapter to allocate to clean energy projects. If approved, this budget will give an unbelievable boost to the photovoltaic industry.
Sunnova Energy International will benefit, since incentivization to go green through the adoption of solar panels as a clean energy source will also create strong demand for related services.
The company’s customer base is getting larger and larger, thanks to the team of professionals who managed to attract 12,700 new customers in just three months.
The acquisition of a residential solar platform from Lennar Corporation (LEN) brought in an additional 33,500 customers, and made Sunnova the exclusive provider for the largest homebuilder in the U.S.
The company had $630 million in cash and equivalents at the end of the quarter to continue to finance business expansion organically, and through strategic acquisitions.
Looking forward to full 2021, Sunnova Energy expects to add between 55,000 and 58,000 new customers, and to hit adjusted operating cash flow of $35 million to $45 million.
Wall Street’s Take
In the past three months, 11 Wall Street analysts have issued a 12-month price target for NOVA. The average Sunnova price target is $51.82, implying 62.2% upside. The analyst rating consensus is a Strong Buy rating, based on nine Buys, two Holds and zero Sell ratings.
Summary
If we look back at the year-to-date period, Sunnova is a poor performer. However, the future is promising due to some catalysts. If these unfold well, they could trigger a significant share price rebound.
Disclosure: At the time of publication, Alberto Abaterusso did not have a position in any of the securities mentioned in this article.
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