Why Investors Got Gloomy on Solar Stocks Today


What happened

A few years ago, solar stocks were – pardon the pun – highly prized by investors. That was then and this is now, however. After new bearish analysis on the sector was released on Wednesday, share prices of a group of solar operators fell rapidly. For instance, Sun Power (SPWR -10.78%) closed the day down almost 11%, while sunrun (CLASSES -6.33%) took a hit of more than 6%.

So what

The new bear on the scene is one of America’s “big four” banks, Wells Fargo. Its analyst Michael Blum initiated coverage on a quartet of solar stocks. In addition to SunPower and Sunrun, it also now follows Sunnova Energy and backup power specialist Generac Holdings.

Blum is not at all enthusiastic about the sector, at least in the short to medium term. In a new research note, he said his outlook on it was neutral to negative. Reasons for this include what he believes to be a lack of support from federal government energy policy (including a lack of clarity on the role of solar power in the economic and infrastructure bill Build Back Better), supply chain challenges and the effects of inflation. .

Now what

Prospects should be better in the longer term. Blum believes that utilities supported by traditional methods of power generation will begin to charge more for their product, making solar all the more competitive.

But it is still largely bearish on hedged stocks. Of the four, it only rates Generac overweight (buy, in other words). Sunnova and Sunrun are both equal weight (hold), while Blum called SunPower underweight (sell).


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