Is Green Shift Possible Amid Russia/Ukraine Conflict?
Stock Analysis & Ideas

Is Green Shift Possible Amid Russia/Ukraine Conflict?

Per a recent Wall Street Journal report, financial institutions are now under pressure to fund fossil fuel (oil and gas) projects. For context, Russia’s invasion of Ukraine has led to supply constraints and pushed fossil fuel prices higher, driving fossil fuel projects.

The report stated that financial institutions funded more clean energy projects in Q1 amid a growing emphasis on cleantech and green energy in recent years. However, given the current geopolitical scenario, including sanctions and a ban on Russian fossil exports, moving away from fossil fuel project financing may take more time. 

The report highlighted that the ongoing supply-chain disruptions are driving up costs for clean energy projects. On the other hand, higher energy prices amid strong demand and supply constraints could drive more oil and gas projects to push higher output.  

Amid the current situation, the demand for fossil fuels could remain elevated. Meanwhile, “short-term outcomes are likely to be climate negative, with increased coal and fuel oil consumption,” noted Cowen’s John Miller 

However, he added, “While we see it as likely that the Biden Administration slows the pace of environmental action, we do not see a pivot toward an embrace of government power to increase fossil production or infrastructure.” 

As for the European Union’s policy outlook, Miller expects an increased focus on gas storage and LNG infrastructure in the near term. Further, he sees this “as a bridge to an accelerated all renewable future.”

Despite the disruptions, the long-term outlook for clean energy remains intact. Let’s look at two green energy stocks that Wall Street analysts are bullish about on TipRanks. 

Enphase Energy (NASDAQ: ENPH)

Amid a growing emphasis on renewable energy, Enphase, which provides microinverter-based solar and battery systems, is well-positioned to capitalize on the demand. 

It recently delivered solid Q4 earnings that highlighted its ability to successfully navigate the ongoing supply-chain disruptions. Further, the company announced a modest price increase in batteries, which will help to offset increased costs. Also, its growing manufacturing capacity and international expansion are positives.

Piper Sandler analyst Kashy Harrison is bullish on ENPH stock. He expects the ongoing Russia/Ukraine conflict to drive demand for renewables, which would benefit Enphase.

Including Harrison, ENPH stock has received 17 Buy recommendations, while four analysts have rated it a Hold. It sports a Strong Buy consensus rating on TipRanks, and the average price target of $218.79 indicates 7.3% upside potential over the next 12 months. 

ENPH stock has positive signals from hedge funds and TipRanks’ investors. Hedge Funds have accumulated 6.4K ENPH shares over the past three months. Meanwhile, 1.9% of the investors holding portfolios on TipRanks have increased their exposure to Enphase shares in the past month. 

Sunrun (NASDAQ: RUN)

Sunrun provides residential solar, storage, and energy services. While Sunrun experienced strong demand and installed a record number of batteries in 2021, supply constraints and COVID-led labor productivity issues remained a drag and took a toll on its share price. 

Nevertheless, strong demand and capacity expansion are positives. Sunrun expects solar energy installed capacity to increase by 20% or more in 2022. Further, management expects the COVID-led pressure on margins to subside as the year progresses. 

Morgan Stanley analyst Stephen Byrd is bullish on RUN stock and expects COVID-related pressure on margins to reverse. 

Overall, Sunrun stock has received 14 Buy and one Sell recommendations for a Strong Buy consensus rating. Moreover, the average analyst price target of $52.01 indicates 80.6% upside potential over the next 12 months. 

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