JPMorgan Downgrades Sunnova (NOVA) to Neutral
JPMorgan analyst Paul Coster downgraded Sunnova (NYSE: NOVA) from Overweight to Neutral.
The analyst comments "NOVA reported 4Q cash generation below guidance owing to lower volume, timing of ITC transfers, and a portion of tax equity funding in December being classified as restricted. The company stated there is substantial doubt regarding its ability to remain a going concern, primarily owing to uncertainty regarding the impact of refinancing 2026 corporate debt maturities. FY25-26 cash generation guidance was suspended as NOVA expects cash generation in both years to potentially be materially impacted by addressing the FY26 debt, which the company intends to address over the coming months. We are lowering our estimates. The company continues to focus on what it can control including higher-margin customers and continued cost reductions. That said, we had anticipated positive trends in cash generation to ease the company’s ability to address its 2026 corporate debt maturities. While NOVA does still have some time to show improved cash generation execution, we believe the path could prove more difficult than previously anticipated. With ~$3bn in PV6 net contracted customer value, we believe the stock could prove significantly undervalued; however we are downgrading the stock to Neutral, from Overweight, and withdrawing our prior December 25 price target of $11 until visibility improves."
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Shares of Sunnova closed at $1.66 yesterday.