By Davit Kirakosyan
Goldman Sachs provided a review on solar/storage equities and upgraded several companies, including Fluence Energy Inc (NASDAQ:FLNC), SunPower (NASDAQ:SPWR), and Shoals Technologies Group Inc (NASDAQ:SHLS).
Despite strong Q4/2022 earnings and generally positive outlooks for 2023, solar/storage equities have recently experienced a decline in performance, with an average drop of 4% compared to the S&P 500's 2% increase since the SVB collapse. According to the firm, this is largely attributed to growing worries about the financing landscape and ongoing doubts regarding the sustainability of growth in the residential sector, particularly as macroeconomic instability remains a significant concern.
Goldman Sachs highlighted significant intra-sector stock dispersion, pointing to heightened selectivity across the group. The firm maintained its preference for (1) utility-scale vs. resi end market exposure, and (2) U.S. domestic vs. non-U.S. levered names, particularly those with manufacturing footprints.
“In light of recent stock dislocation across the group, we see improved risk-reward in a number of names,” said the firm, and upgraded Fluence Energy from Neutral to Buy with a price target of $29.00 (from $25.00), SunPower Corporation from Sell to Neutral with a price target of $13.00, and Shoals Technologies from Sell to Neutral with a price target of $22.00 (from $20.00).