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Solar energy stocks (NYSEARCA:TAN) finished broadly lower Thursday as analysts at Susquehanna cut price targets on several top names in the sector, saying “recent industry checks and conversations with installers and equipment providers suggest softening demand across the U.S. market.”
Susquehanna said its biggest takeaway from conversations with installers has been softening demand in U.S. residential markets, especially outside of California, where installations are still working through the pre-NEM backlog and which should sustain installations through Q3.
Higher interest rates have taken their toll on the appetite for solar, and electricity price inflation has largely moderated, with April prices below the peak seen last September, according to Susquehanna, which said one of the main drivers of installation growth in the past 18 months has been escalating utility prices improving the relative value proposition of solar, but that prices likely have settled in now.
The firm said it remains positive overall on the long-term prospects for solar but is tempering growth expectations, prompting it to reduce stock price targets across the board.
In cutting Enphase Energy’s (NASDAQ:ENPH) PT to $225 from $275, Susquehanna said the battery business “could be more adversely impacted by growing competition,” prompting the firm to lower estimated battery shipments through 2025.
Other price target cuts: Sunnova Energy (NOVA) to $34 from $44, SunPower (SPWR) to $16 from $22, Sunrun (RUN) to $33 from $40, and SolarEdge Technologies (SEDG) to $365 from $400.
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