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on friday, Sunnova Energy International Co., Ltd. . (NYSE:) Northland Capital Markets has adjusted its outlook on the company, resulting in a change to its stock rating and price target. The company downgraded Sunnova from “outperform” to “market perform” and lowered its price target from $12.00 to $9.00.
”“NOVA recorded the most obvious failure on the revenue front in the fourth quarter, but there were other challenges as well,” the analyst said.
Despite strong adjusted EBITDA, this result was primarily due to a significant one-time gain from the sale of accumulated investment tax credits (ITC) amounting to $193 million. This number is in sharp contrast to the expected quarterly run rate of $30-40 million in ITC sales going forward.
Sunnova, a residential solar power and energy storage service provider, has seen significant growth in its customer base, with cumulative customer numbers increasing by 50% in 2023. The company also confirmed its goal of a further 45% increase in 2024. This customer expansion is a notable positive for the company's prospects.
However, the company's decision to lower its stock price was influenced by concerns about rising customer churn rates. This factor contributed to Northland Capital Markets taking a more cautious stance on Sunnova's future financial performance and market position.
Investment Pro Insights
In light of the recent downgrade by Northland Capital Markets, investors in Sunnova Energy International Inc. (NYSE:NOVA) could benefit from additional insights provided by InvestingPro. With a market capitalization of approximately $1.05 billion, Sunnova's stock price is under considerable pressure due to its difficult financial situation.
One important metric that stands out is the company's price-to-earnings ratio, which stands at a low price-to-earnings ratio of 0.68 for trailing twelve months to Q4 2023. This suggests the stock may be undervalued relative to the company's book value, making it an attractive entry point for value investors. Moreover, despite the company's sales increasing by a significant 29.22% over last year, analysts are not optimistic about its near-term profitability as it has not made a profit in the past 12 months.
InvestingPro Tips highlights that Sunnova operates with a large amount of debt and may have difficulty paying interest on its debt. This is particularly concerning given the company's recent share price performance, which has seen a significant one-week total price return of 23.96%. Such high volatility may indicate investor sentiment and market concerns about the company's financial health.
For those looking to learn more about Sunnova's financial health and future prospects, InvestingPro has plenty of additional tips. In fact, 16 more InvestingPro Tips are available to provide further guidance on company valuations, cash flows, and stock price performance trends. Interested investors can explore these tips and more by visiting https://www.investing.com/pro/NOVA and using a coupon code. pro news 24 Get an extra 10% off annual or biennial Pro and Pro+ subscriptions.
As Sunnova continues to navigate financial challenges, these InvestingPro Insights can help investors make more informed decisions.
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