Sunnova Energy International Inc.

Sunnova Energy International Inc. (NYSE: NOVA) is a solar and energy storage company that serves consumers across the United States. The Company has a home solar dealer model in which it collaborates with local dealers to develop, manufacture, and install solar energy and energy storage systems for its consumers.

Key Highlights

• Sunnova Energy International Inc. announced on May 3, 2022, that it will launch an energy plan that will provide new customers with a fixed percentage discount off current utility prices as well as a 25-year market-based rate, all with the goal of providing consumers with price certainty regardless of volatile energy costs.
• On June 14, 2022, Sunnova Energy International Inc., and Montgomery County Green Bank partnered to help low-to-moderate income (LMI) households in Montgomery County, Maryland, transition to affordable, clean energy solutions by going solar with Sunnova.
• When comparing the three months ended March 31, 2022, to the three months ended March 31, 2021, revenue climbed by USD24.4 million to USD65.7 million. The rise was mostly due to an increase in the number of solar energy systems in service and the purchase of SunStreet in April 2021.
• When comparing the three months ended March 31, 2022, to the three months ended March 31, 2021, total operating expenditure, net increased by USD35.3 million to USD99.9 million. A rise in the number of solar energy systems in service, the acquisition of SunStreet in April 2021, higher depreciation expenditure, and higher general and administrative expenses all contributed to this increase.
• Sunnova's net loss for the three months ended March 31, 2022, was USD20.6 million, compared to USD24.1 million for the three months ended March 31, 2021. This smaller net loss was mostly attributable to decreased net interest expense, which was primarily related to a USD16.6 million rise in unrealized profits on derivatives.
• Sunnova has USD325 million in cash as of March 31, 2022, comprising restricted and unrestricted cash. Sunnova's tax equity and warehouse credit facilities have an additional USD378 million in tax equity obligations and debt capacity as of March 31, 2022.

Stock recommendation

NOVA's stock price has corrected 36.11% in the past six months and is currently on the lower side of its 52-week range of USD 12.47 to USD 46.40.  As can be seen in the chart below, the price is currently below both the short-term (50-day) SMA and long-term (200-day) SMA, with RSI at 42.40. The price has broken the short-term SMA upside and currently retesting the short-term SMA as support.

Given the stock's considerable correction in the past six months, current macroeconomic situation, financial results, and technical analysis, we propose a "Watch" rating on the stock at its closing price of USD 17.55 as of June 16, 2022, with further analysis when price makes higher highs on the daily time frame.

1- Year Technical Chart, as of June 16, 2022. Data Source: REFINITIV, Analysis by Kalkine Group

Technical Analysis Summary

* Closing price as of June 16, 2022.

Investors can evaluate the stock based on the support and resistance levels provided in the report in case of keen interest taking into consideration the risk-reward scenario.

Technical Indicators Defined: -

Support: A level where-in the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and the uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavorable movement in the stock prices.

Note 1: The reference data in this report has been partly sourced from REFINITIV.  

Note 2: Investment decisions should be made depending on the investors' appetite for upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting the stock if the Target Price mentioned as per the valuation has been achieved and subject to the factors discussed above. 

Note 3: The report publishing date is as per the Pacific Time Zone.