Renewable energy 'not shining bright' as Citi cuts six stock price targets
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Price targets are slashed for six renewable energy companies by Citi analyst J.B. Lowe, saying the sector is weighed by "the four-headed monster" of rising inflation, a rotation from growth to value stocks, the scuttling of Build Back Better legislation and changes to solar incentives in California.
Based on lower EBITDA multiples for 2023, Lowe cuts PTs by ~20% for Enphase Energy (ENPH
-1%), First Solar (FSLR
-1.4%) and SolarEdge Technolgies (SEDG
-0.2%) to $205 from $255, to $80 from $100 and to $310 from $385, respectively.
Canadian Solar (CSIQ
-0.7%) now is Lowe's top sector pick while still cutting his price target to $40 from $46, as the analyst expects margins to expand with polysilicon costs declining significantly as supply gets added to the market late in 2022 and in 2023.
Lowe also sees Canadian Solar raising significant funds through the IPO of its CSI Solar subsidiary that will be used to invest in next-generation cell and module capacity.
The analyst also cuts price targets for Generac (GNRC
+0.8%) to $375 from $475 and Chart Industries (GTLS
+0.7%) to $167 from $198.
According to reports this week, the Biden administration is considering a plan that would keep Trump-era tariffs on solar power imports but exclude imports of bifacial panels.