Sunnova Energy International

Sunnova Energy International Inc. (NYSE: NOVA) is a company that provides residential solar and energy storage solutions to customers throughout the United States. The company operates using a residential solar dealership model, collaborating with local dealers who take care of the initial steps such as system design and installation on behalf of Sunnova's customers. Sunnova also offers a range of services, including operations and maintenance, continuous monitoring, repair and replacement services, equipment upgrades, and on-site power optimization for its customers.

Recent Financial and Business Updates:

• Third Quarter 2023 Revenue Growth: In the three months ending September 30, 2023, revenue surged to USD 198.4 million, marking a USD 49.0 million increase compared to the same period in 2022. This notable rise was primarily attributed to expanded solar energy systems in operation, amplified inventory sales, and a targeted increase in service revenue by offering supplementary services to existing customers.
• Nine-Month Revenue Surge: For the nine months concluding on September 30, 2023, revenue reached USD 526.5 million, escalating by USD 164.4 million from the corresponding period in 2022. The pronounced increase stemmed from heightened solar energy systems in operation, an augmented focus on additional services to existing clients, and increased inventory sales revenue.
• Operating Expenses and Net Adjustments: In the three months ending September 30, 2023, total operating expenses netted at USD 236.6 million, a USD 59.5 million rise compared to the same period in 2022. This increase was primarily influenced by the expansion of solar energy systems, higher general and administrative costs, amplified expenses related to inventory sales, and augmented service provisions. Conversely, there was a partial decrease in other operating expenses due to shifts in the fair value of financial instruments and contingent consideration.
• Nine-Month Operating Expense Trends: Over the nine months ending September 30, 2023, total operating expenses amounted to USD 673.2 million, showing a significant increase of USD 246.5 million from 2022. This escalation primarily traced back to amplified solar energy system installations, heightened general and administrative costs, increased expenses linked to inventory sales and additional services.
• Earnings and Adjusted EBITDA: The three months ending September 30, 2023, witnessed a net loss of USD 56.5 million, higher than the USD 32.3 million loss in the corresponding 2022 period. This amplified loss was primarily due to increased interest expenses, elevated general and administrative expenses, partially offset by increased interest income and tax benefits. For the nine months ending September 30, 2023, the net loss soared to USD 267.6 million, a substantial increase from the USD 68.3 million loss in 2022, again influenced by heightened expenses but mitigated by increased income from interest and tax benefits.
• Financial Movements and Guidance: Adjusted EBITDA remained relatively steady at USD 40.4 million for the three months ending September 30, 2023, while for the nine months ending at the same date, it declined to USD 83.0 million from USD 93.5 million in 2022 due to increased spending from unexpected growth. Notably, there were significant increases in proceeds from customer notes and investments in solar receivables due to an expanded customer loan portfolio, resulting in escalated interest income.
• Financial Position and Future Projections: As of September 30, 2023, Sunnova possessed total cash reserves of USD 725.1 million. Management reaffirmed 2023 full-year guidance for various aspects including customer additions, Adjusted EBITDA, interest income from customer notes, and proceeds from investments in solar receivables. Additionally, the company introduced its 2024 guidance, projecting aggressive growth in customer additions, EBITDA, and other financial aspects.

Technical Observation (on the daily chart)

The Relative Strength Index (RSI) over a 14-day period stands at 41.05, recovering from the oversold zone and showing signs of bullish divergence with the expectations of an upside momentum. The stock price has shown decent consolidation in the USD 8-USD 10 support zone, after a healthy correction from levels of around USD 24. The current price is expected to hold these support levels with expectations of a break-out in the upward directions. Additionally, the stock's current positioning is below both 21-period SMA and 50-period SMA, which may serve as a dynamic short-term resistance level. Meanwhile, the stock price is currently taking resistance from the 50-day Simple Moving Average (SMA).

As per the above-mentioned price action, recent key business and financial updates, momentum in the stock over the last month, and technical indicators analysis, a ‘SPECULATIVE BUY’ rating has been given to Sunnova Energy International (NYSE: NOVA) at its closing price of USD 8.66 as of November 10, 2023.

Individuals 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. 

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing.

Related Risk: This report may be looked at from a high-risk perspective and a recommendation is provided for a short duration. This report is solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc. 

How to Read the Charts?

The yellow colour line reflects the 21-period simple moving average (SMA) while the blue line indicates the 50- period simple moving average (SMA). SMA helps to identify existing price trends. If the prices are trading above the 21-period and 50-period moving average, then it shows prices are currently trading in a bullish trend.

The orange colour line in the chart’s lower segment reflects the Relative Strength Index (14-Period) which indicates price momentum and signals momentum in trend. A reading of 70 or above suggests overbought status while a reading of 30 or below suggests an oversold status.

The red and green colour bars in the chart’s lower segment show the volume of the stock. The volume is the number of shares that changed hands during a given day. Stocks with high volumes are more liquid than stocks with lesser volume as liquidity in stocks helps with easier and faster execution of the order.

The Orange colour lines are the trend lines drawn by connecting two or more price points and used for trend identification purposes. The trend line also acts as a line of support and resistance.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock. 

Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock. 

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

The reference date for all price data, currency, technical indicators, support, and resistance levels is November 10, 2023. The reference data in this report has been partly sourced from REFINITIV. 

Abbreviations

CMP: Current Market Price

SMA: Simple Moving Average

RSI: Relative Strength Index

USD: United States dollar 

Note: Trading decisions require a thorough analysis by individual. Technical reports in general chart out metrics that may be assessed by individuals before any stock evaluation. The above are illustrative analytical factors used for evaluating the stocks; other parameters can be looked at along with additional risks per se. Past performance is neither an indicator nor a guarantee of future performance.