Sunnova Energy International Inc. (NYSE: $NOVA) is a leading energy service provider in the US based in Houston, TX. It offers residential and commercial solar energy solutions, including solar battery storage, and aims to make renewable energy more reliable, accessible, and affordable.
Sunnova Energy’s Exclusive Deal with the Home Depot
On Tuesday, March 26, 2024, Sunnova Energy announced that it had entered into an agreement with The Home Depot to become the exclusive provider of solar and battery storage solutions across the US. Customers across over 2000 Home Depot stores in the US and its territories will now have access to the Sunnova Adaptive Home energy solutions.
Commenting on the deal, Michael Grasso, Executive VP at Sunnova Energy, stated, “We are thrilled to become the exclusive provider for home solar and battery storage services for The Home Depot, a company that shares our commitment to providing an unparalleled customer experience.”
Sunnova Energy has a long-standing relationship with Home Depot. They first started working together in 2021, when their products became available at 100 Home Depot stores in the hurricane-prone areas of Virginia, Florida, and Maryland, offering customers easy access to the Sunnova SunSafe solar and battery storage solutions.
In 2022, they expanded their partnership to include Puerto Rico, where their SunSafe products were made available across all Home Depot stores on the island. In 2023, Sunnova expanded into 15 markets with Home Depot, making their products available in around 400 stores across the US.
The US Solar Market
Solar energy adoption has been growing rapidly in the US. According to an EIA report, solar power generation in the US is forecast to grow by 75% from 163 billion kWh at the end of 2023 to 286 billion kWh at the end of 2025. The growth will be driven by falling installation costs and favorable local, state, and federal policies.
To get a share of this solid growth opportunity, Sunnova Energy has been working to grow access via strategic partnerships. Thus far, the company has over 419,000 customers in over 45 US states and territories. At the end of December 2023, the company had 2.5 gigawatts of solar energy capacity and 1,090 MWh of solar battery storage under management.
Sunnova Energy Director Purchase NOVA Shares
At the end of February 2024, Sunnova Energy director Akbar Mohamed bought 152,450 shares of the company, according to an SEC filing. The purchase brought the percentage of shares held by insiders to 2.37%. Insider activity is always worth looking at, as it often signals whether the company’s higher-ups believe in the future of their own company or not.
Morgan Stanley Downgrades NOVA Shares
On March 5, 2024, Morgan Stanley announced that it was downgrading its rating for NOVA shares from overweight to Equal Weight. At the time, the bank stated that there was a huge dislocation between the company’s stock price and its asset base, slashing its price target to $14 per share.
Sunnova Energy (NOVA) Share Performance
Following the deal with The Home Depot, Sunnova Energy shares surged 7.37%, closing trading at $5.97 per share on Wednesday, March 27. Year-to-date, NOVA shares have lost 60.88% of their value, which is reflected in the 37.7% short interest in the stock.
Sunnova has underperformed the solar energy industry, which is down 10.26% YTD and the S&P 500, which is up 10.66% year-to-date.
Sunnova Stock Forecast
NOVA shares have an overall strong buy rating, according to 16 stock analysts. They forecast a wide range for the stock, with a high of $31 and a low of $9. Their average target is $16.27, which is a 172.53% upside.
Is Sunnova Energy A Buy?
While Sunnova did not provide any details on how the Home Depot deal would impact their financials, it is still a huge win for the stock. In recent years, the solar industry has suffered a huge blow, with many companies announcing layoffs.
However, on a long-term basis, solar energy demand is not slowing, with homeowners simply putting off their purchases until interest rates drop. When the solar energy sector opens up again as interest rates drop, Sunnova will be strategically positioned with easy access to the market via Home Depot. Consequently, the strong buy rating is an accurate representation of its performance in the medium and long term.
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