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:

• Upcoming Financial Announcement from Sunnova Energy International Inc.: Sunnova Energy International Inc. disclosed its plan to unveil financial results for the fourth quarter and full year of 2023. The announcement is scheduled after market closure on February 21, 2024. Subsequently, a conference call has been slated for February 22, 2024, at 8:00 a.m. Eastern Time to provide insights and discuss the reported results.
• Revenue Growth in Q3 2023: In the quarter ending September 30, 2023, Sunnova reported a robust revenue increase to USD 198.4 million, reflecting a USD 49.0 million surge compared to the corresponding period in 2022. This notable expansion was driven by the augmented deployment of solar energy systems, enhanced inventory sales, and a targeted rise in service revenue through the provision of additional services to existing customers.
• Nine-Month Revenue Surge: For the nine months ending on September 30, 2023, Sunnova experienced a substantial revenue surge, reaching USD 526.5 million. This marked a significant increase of USD 164.4 million compared to the same period in 2022. The pronounced growth was attributable to the heightened presence of solar energy systems, an increased focus on providing supplementary services to existing clients, and enhanced revenue from inventory sales.
• Operating Expenses and Net Adjustments: In the quarter ending September 30, 2023, total operating expenses amounted to USD 236.6 million, indicating a USD 59.5 million rise compared to the same period in 2022. This increase was primarily influenced by the expanded deployment of solar energy systems, higher general and administrative costs, increased 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 reached USD 673.2 million, showcasing a substantial increase of USD 246.5 million from the comparable period in 2022. This escalation was primarily attributed to the amplified installation of solar energy systems, heightened general and administrative costs, increased expenses linked to inventory sales, and additional services.
• Earnings and Adjusted EBITDA: In the quarter ending September 30, 2023, Sunnova reported a net loss of USD 56.5 million, surpassing the USD 32.3 million loss in the corresponding 2022 period. This heightened loss was primarily attributed to increased interest expenses and 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 surged to USD 267.6 million, a substantial increase from the USD 68.3 million loss in 2022, influenced by heightened expenses but mitigated by increased income from interest and tax benefits.
• Financial Movements and Guidance: Adjusted EBITDA remained relatively stable at USD 40.4 million for the quarter 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 held total cash reserves of USD 725.1 million. The management reaffirmed full-year 2023 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 43.19, recovering from the oversold zone, with the expectations of an upside momentum. The stock price has shown decent consolidation in the USD 10-USD 11 support zone, after a healthy correction from levels of around USD 16. 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 has formed an engulfing candle on daily time frame on 29^th January 2024, with increased volume, showing expectations of an upward momentum.

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 10.83 as of January 29, 2024.

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. 

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.

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is January 29, 2024. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: The report publishing date is as per the Pacific Time Zone.