Wall Street analysts pick their favorite solar stocks as global energy prices soar

Published Sun, Mar 6 202211:56 PM ESTUpdated Mon, Mar 7 20225:53 AM EST

Wall Street analysts have named their favorite solar stocks, with shares having rallied over the past week as traditional energy prices soar due to the Russia-Ukraine crisis. The surge in oil and gas prices due to the Russia-Ukraine war has stressed the need for a greater diversification of energy sources, with the likes of Europe heavily reliant on imports from Russia. This has coincided with an increasing focus on switching to renewable energy sources, with growing concerns around the climate crisis . The conflict could, therefore, accelerate the adoption of renewable energy. Indeed, Germany said earlier this week that it is now bringing forward its goal of having all its electricity powered by renewables to by 2035, according to reports . The MAC Global Solar Energy Stock index was up 5.46% over the past five days to Friday and Wall Street analysts say there are a number of buying opportunities in the sector. Sunnova Energy Credit Suisse research analysts like U.S. residential solar company Sunnova Energy . The company's shares were trading at $18.97 on Friday, but Credit Suisse analysts think that price could more than double, with a target price of $53 and an outperform rating. That's according to a Credit Suisse note, dated March 2, off the back of a meeting with Sunnova's management team at the bank's energy summit. Sunnova's management believes there is the potential to increase solar lease, power purchase agreement, or loan prices, in light of rising energy bills. In addition, they expected "residential solar penetration will continue to grow at strong pace this decade and a 50-60% penetration rate of rooftops by 2030 is not farfetched." Enphase Energy James West, senior managing director at Evercore ISI, told CNBC via email that his firm also recommended Sunnova, as well as U.S. firm Enphase Energy . "The residential solar market is extremely under-penetrated, growing rapidly, and pricing is moving higher although total cost of ownerships remains attractive compared to the legacy electricity grid," West said. Evercore expects Enphase shares to outperform, according to a note published Feb. 8. The firm has a target price of $265 on the stock, with shares trading at $159.03 on Friday. Evercore's equity researchers highlighted in their note that Enphase had a strong 2021, which set it up for continued growth in 2022. "Enphase continues to accelerate its transition from solar company to energy transformation company with the belief that full home electrification is inevitable," they said. Sunrun West also named U.S. solar panel company Sunrun as one of their recommendations. Evercore has an outperform rating on Sunrun, according to a note published Feb. 18, giving it a target price of $75. Shares were trading at $25.91 on Friday. Sunrun gained more than 110,000 customers in 2021, which represented 31% growth in solar energy capacity installed, according to Evercore's note. This growth rate was higher than Sunrun's previous guidance and was its highest in five years, despite the effect of Covid-19. "In addition, the company's strategic efforts in the acceleration of home electrification and transportation should provide meaningful flywheel effects," Evercore's equity researchers said. SolarEdge Technologies In addition to Enphase Energy, Jeffrey Osborne, a managing director at Cowen, told CNBC via email that Israel-based SolarEdge Technologies was another of his firm's favorite solar stocks. Osborne believed that sentiment toward renewable power had been elevated, given Germany's moves since Russia's invasion of Ukraine, while higher prices of traditional energy made renewable power more cost effective. Cowen had an outperform rating on SolarEdge, in a note dated Feb. 16. Cowen analysts gave it a target price of $344, with it trading at $303.10 on Friday. "SolarEdge, as a global leader in module power electronics, has made notable progress in growing its business and taking market share from competitors in multiple geographies and end markets, notably commercial," the analysts said. Meyer Burger Jefferies' equity analysts have a buy rating on Meyer Burger , which produces the systems to manufacture solar cells and is headquartered in Switzerland. Jefferies had a buy rating of 80 Swiss centimes (82 cents) on Meyer Burger, according to a note dated Feb. 17. The stock was trading on 34 Swiss centimes on Friday. Meyer Burger is set to supply more than 6,000 high-performance solar modules for German soccer club SC Freiburg's Europa Park stadium, with the project expected to start in May 2022. "Demand for Meyer Burger modules is showing to be robust for commercial projects, despite not even having launched its commercial (C & I) products yet," Jefferies' analysts said.

Contractors install Sunrun solar panels on the roof of a home in San Jose, California, Feb. 7, 2022.

David Paul Morris | Bloomberg | Getty Images

Wall Street analysts have named their favorite solar stocks, with shares having rallied over the past week as traditional energy prices soar due to the Russia-Ukraine crisis.