With Earth Day just around the proverbial corner, Evercore ISI analysts launched positive coverage on four clean energy stocks.
Plug Power Inc. (NASDAQ: PLUG): Analyst James West initiated coverage on Outperform with a price target of $ 42. The current price is $ 27.24.
Headquartered in Latham, New York, Plug Power is a provider of hydrogen fuel cell solutions designed to replace traditional batteries in electrically powered devices and vehicles.
West predicted a strong future for the company, writing that hydrogen “will become more commercially viable by 2030, while the greater potential of H2 should unfold after 2030. This optimistic, long-term view should enable PLUG to achieve a 3-4% share in a + USD 250 billion market in 2030. “
In addition, West forecast new business opportunities for Plug Power during the year that would enable expansion into adjacent markets and secure partnerships or joint ventures with other companies.
Despite what West described as the company's “pending adjustment of previously reported financials and a non-cash charge” and the challenge of competing technologies such as lithium-ion batteries, West defined Plug Power as a “strong company with a sustainable and growing business” with long-term franchise value. “
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Enphase Energy Inc. (NASDAQ: ENPH): West initiated reporting on outperform and a price target of $ 184; The current price is $ 150.01.
Headquartered in Fremont, California, Enphase is a provider of household power solutions to the solar photovoltaic industry. West described the company's “dominant position in the US domestic microinverter market” as a critical component of its performance, adding that the company is successfully meeting the needs of its sector.
“ENPH is evolving from just selling hardware to providing more recurring services and streamlining the installation process, thereby increasing the revenue potential per home,” West wrote. “The company stands out in the clean tech world because it already has strong margins and positive free cash flow.”
West has a bright red flag on potential risks to the company's ability to deploy new products, its efforts to penetrate the U.S. small commercial property market, and whether a surge in interest rates will deter homeowners from financing solar panels, hoisted. He also warned of the company's planned international expansion by pointing out the “extremely fragmented nature of the European market”.
Still, West acknowledged the company has already made an impact, noting that it has shipped more than 32 million of its microinverters and deployed 1.4 million of its systems in more than 130 countries.
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Sunrun Inc. (NASDAQ: RUN): West initiated reporting on outperform and a target price of USD 87; The current price is $ 52.16.
West described Sunrun, headquartered in San Francisco, as “the clear US market leader for solar modules for private households and as such enjoys economies of scale in a massively undermined market”. He cited the company's net income of $ 4.2 billion in 2020, adding that its 550,000 customers would enable the company to take advantage of “upselling and cross-selling opportunities.”
West admitted that there were risks to be considered: a shift in the market from leasing solar systems to ownership, a slower than expected move from traditional energy sourcing to clean technology solutions, competition in the sector, the impact of inflation on equipment and installation costs and the ramifications of higher interest rates would be required for solar financing and for the broader capital markets.
Not convinced, however, that interest rate risk would adversely affect its further performance, West stated that the company “has access to cheap project finance and utility costs will also rise, encouraging customers to continue buying solar energy deal “.
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Sunnova Energy International Inc. (NYSE: NOVA): Analyst Sean Morgan initiated coverage on Outperform with a price target of $ 52. The current price is $ 38.
Houston-based Sunnova provides solar and energy storage services in the U.S. residential real estate market, which Morgan says accounts for around 3% of the country's 84 million single-family homes.
Morgan praised the company's service offering, noting that most of its customers “have a term of more than 15 years with many power purchase agreements, loans and leases with a term of 25 years. These dynamics should lead to increased profitability as well as a larger and more stable cash flow base as the company matures. “
The company's biggest risk, Morgan added, would be “a reversal of clean, energy-friendly federal and state tax and energy policies, such as solar tax cuts and cheap net metering.” As with West's analysis, Morgan raised concerns about the higher rates this sector could generate.
On the positive side, however, increasing battery power storage rates will strengthen relationships with new and current customers, while expanding to other services, including EV charging, would further strengthen its position in the marketplace.
(Courtesy Mohamed Hassan / Pixabay.)
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