On Friday, Susquehanna maintained a Positive rating on Sunnova Energy International Inc . (NYSE:NOVA) shares but reduced the price target to $12 from $20. The revision reflects a more conservative outlook for residential solar installations in the upcoming year.
The firm has adjusted its forecast for customer additions in 2024 to 182,000, down from 189,000, which falls slightly short of the company's own guidance range of 185,000 to 195,000.
The firm also revised its growth expectations for 2025, anticipating a 17% customer increase, a decrease from the previously expected 23%. This change is attributed to an anticipated shift in the company's strategy towards prioritizing cash generation and a disciplined growth approach.
Due to these revisions, the EPS forecasts for 2024 and 2025 have been altered to $(3.52) and $(3.31) respectively, from the earlier estimates of $(3.48) and $(3.42). Despite the lowered price target and tempered growth projections, the Positive rating indicates a continued optimism about the company's performance.
In justifying the new price target, the firm cited "temporary near-term headwinds" as a reason for applying a 30% discount to their net customer value, which is still based on a 7% discount rate.
Additionally, the firm has maintained a 50% discount on its renewal value estimation. This conservative approach in valuation reflects a cautious stance in the face of market challenges while still recognizing the underlying potential of Sunnova.
InvestingPro Insights
Recent data from InvestingPro suggests some challenges for Sunnova Energy International Inc. (NYSE:NOVA). With a market capitalization of $635.3 million and a negative Price/Earnings (P/E) ratio of -1.69 for the last twelve months as of Q4 2023, the company's financial health appears to be under scrutiny. The Price/Book multiple stands at a low 0.42, which may signal an undervaluation of the company's assets relative to its share price. Additionally, while the company has experienced a revenue growth of 29.22% over the last twelve months, the stock has seen a significant price decline with a 1-year total return of -65.5%.
The InvestingPro Tips highlight that NOVA operates with a significant debt burden and may have trouble making interest payments, which is a crucial factor for investors to consider. On the other hand, analysts anticipate sales growth in the current year, suggesting potential for recovery. Notably, the stock has taken a substantial hit over the last week, month, and three months, with price volatility being a consistent theme. With these considerations, investors may want to explore the comprehensive list of 19 additional InvestingPro Tips available for NOVA at Investing.com/pro/NOVA to gain deeper insights into the company's financials and market performance.
Interested readers can take advantage of a special offer using the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription at InvestingPro, where they can access real-time data and expert analysis to inform their investment decisions.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.