Earnings Update: Sunnova Energy International Inc. (NYSE:NOVA) Just Reported And Analysts Are Trimming Their Forecasts

It's been a pretty great week for Sunnova Energy International Inc. (NYSE:NOVA) shareholders, with its shares surging 20% to US$4.79 in the week since its latest first-quarter results. It looks like weak result overall, with ongoing losses and revenues of US$161m falling short of analyst predictions. The losses were a relative bright spot though, with a per-share (statutory) loss of US$0.57 being 29% smaller than what the analysts had presumed. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Sunnova Energy International after the latest results.

Check out our latest analysis for Sunnova Energy International

Taking into account the latest results, the current consensus from Sunnova Energy International's 23 analysts is for revenues of US$888.1m in 2024. This would reflect a major 23% increase on its revenue over the past 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 27% to US$2.38. Before this latest report, the consensus had been expecting revenues of US$967.9m and US$2.49 per share in losses. So there seems to have been a moderate uplift in analyst sentiment with the latest consensus release, given the upgrade to loss per share forecasts for this year.

The analysts have cut their price target 16% to US$12.48per share, suggesting that the declining revenue was a more crucial indicator than the forecast reduction in losses. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on Sunnova Energy International, with the most bullish analyst valuing it at US$26.00 and the most bearish at US$5.50 per share. With such a wide range in price targets, analysts are almost certainly betting on widely divergent outcomes in the underlying business. With this in mind, we wouldn't rely too heavily the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that Sunnova Energy International's revenue growth is expected to slow, with the forecast 32% annualised growth rate until the end of 2024 being well below the historical 42% p.a. growth over the last five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 4.5% per year. Even after the forecast slowdown in growth, it seems obvious that Sunnova Energy International is also expected to grow faster than the wider industry.

The Bottom Line

The most obvious conclusion is that the analysts made no changes to their forecasts for a loss next year. They also downgraded Sunnova Energy International's revenue estimates, but industry data suggests that it is expected to grow faster than the wider industry. Even so, earnings are more important to the intrinsic value of the business. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple Sunnova Energy International analysts - going out to 2026, and you can see them free on our platform here.

Even so, be aware that Sunnova Energy International is showing 4 warning signs in our investment analysis , and 2 of those are a bit concerning...

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