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Sunnova Energy slides on BMO downgrade after outpacing solar peers

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Closeup of photovoltaic panels on a rooftop. Reflecting photovoltaic modules on a rooftop.

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Sunnova Energy (NYSE:NOVA) -4.7% in Friday’s trading as BMO Capital downgraded the stock to Market Perform from Outperform with a $25 price target, trimmed from $27, citing relative valuation after outperforming its solar peers by 35%-60% YTD.

Sunnova (NOVA) remains on track for a record year in terms of customer additions and other key metrics thanks to its differentiated residential platform that relies on a growing dealer network that is less exposed to California, but the stock price increasingly reflects these positives, BMO’s Ameet Thakkar said.

The company’s success in avoiding the slowdown in U.S. residential solar capacity growth this year is owed largely to the continuing expansion of its dealer network, but “we see the potential for future dealer growth not driving the impact on capacity growth in future periods,” the analyst wrote.

Thakkar said he favors inverter names Enphase Energy (ENPH) and SolarEdge Technologies (SEDG), given their leverage to international markets and 45x PTC credits.

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