Piper Sandler analysts shuffled their ratings on renewable energy stocks in a note Tuesday, stating that the "Fed pivot represents a major macro theme for renewables" in 2024 and is an improvement for its coverage.
As a result, the firm highlighted Nextracker (NXT) and Itron (NASDAQ:ITRI), which it upgraded to Overweight from Neutral, as its favorite ideas. Additionally, it raised Sunnova Energy International Inc . (NYSE:NOVA) and Sunrun (NASDAQ:RUN) to Overweight from Neutral and downgraded Array Technologies Inc. (ARRY) and SolarEdge Technologies (NASDAQ:SEDG) to Neutral from Overweight and Plug Power (NASDAQ:PLUG) to Underweight from Neutral.
"We see the benefits accruing to the installers initially ('24) and inverters eventually ('25) with the rest of our space benefiting LT [long-term]," said analysts at Piper Sandler.
They noted that the other major macro theme for renewables next year surrounds the election, which possesses a negative risk/reward skew.
"From a sub-sector perspective, we: i) anticipate growth from utility-levered names; ii) see US resi declining/troughing before recovering later in '24; iii) see risk for US green hydrogen," wrote the firm. "From an equity perspective, we like businesses with high visibility to forward revenue growth (via utility-levered backlogs) and positive earnings momentum with reasonable valuations."