Jefferies cuts Sunnova stock rating, slashes target to $2

Investing.com -- Jefferies downgraded Sunnova Energy International Inc (NYSE:NOVA) to "Hold" from "Buy" and cut its price target to $2 from $9 given liquidity concerns and a shift in focus from growth to debt management.

“Despite progress toward claiming the bonus adders, softness in the resi market and unexpected tightening in tax equity markets has weighed on NOVA, such that we think it's likely that NOVA misses on targets,” analyst said.

The firm flagged tightening tax equity markets and residential solar softness as key risks, with cash generation targets for 2025-2026 appearing increasingly difficult to achieve. Jefferies expects a downward revision to Sunnova’s 2025 guidance and expanded cost-cutting measures when it reports fourth-quarter results.

Managing 2026 debt maturities, including $975 million in private placement and convertible bonds, is now the company's top priority, Jefferies said. While refinancing challenges persist, the firm believes Sunnova has options, including leveraging $1.2 billion in net contracted cash flows.

Competitive pressures from players like NextEra’s LightReach also pose a risk to Sunnova’s dealer relationships, the firm added.