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As the demand for clean and renewable energy continues to rise, analysts are eyeing opportunities in the solar sector, especially within the residential scale solar installation providers. Despite challenges faced by the residential solar business due to high-interest rates impacting financing costs, a positive shift may be on the horizon with the Federal Reserve considering rate adjustments.
Mizuho analyst Maheep Mandloi, covering the industry’s prospects, outlines key factors contributing to a potentially brighter future for the residential solar sector. He identifies two solar stocks with significant upside potential, both forecasted to exceed 90%.
1. Sunnova Energy International (NOVA):
- Sunnova, a prominent player in the US residential solar market, operates across all facets of the sector, offering comprehensive services from rooftop solar installations to power storage solutions.
- Despite recent earnings missing forecasts, Sunnova’s strength in financing and support from the Inflation Reduction Act positions it favorably. Mandloi emphasizes its ability to capture market share and growing value creation.
- Mizuho’s Buy rating for Sunnova is backed by a $20 price target, indicating a robust 96% potential upside.
2. Sunrun, Inc. (RUN):
- Sunrun distinguishes itself as a full-service provider, delivering tailor-made solar installations for single-family homes, including advanced technology such as smart control systems and power storage batteries.
- The company’s financing flexibility and focus on lease-based payment models contribute to its resilience in a challenging environment, making it the largest third-party owner and developer of residential solar systems in the US.
- Mandloi’s Buy rating for Sunrun comes with a $23 price target, suggesting an impressive 103% upside potential.
Analysts believe that these companies, with their strategic positioning and innovative approaches, are well-poised to capitalize on the evolving landscape of the residential solar sector. Investors looking for opportunities in the renewable energy space may find these solar stocks compelling additions to their portfolios.
