Shares of Sunnova Energy International sank more than 4% in Monday’s extended market session as the provider of residential solar and energy storage services announced the pricing of its 7 million public share offering. The stock closed 10% lower on Monday.
As part of the share offering, Sunnova (NOVA) will sell 7 million shares of its common stock, par value $0.0001 per share, at a price to the public of $37 per share, which represents a discount of about 10% to the closing price on Nov. 30. The offering will be split into the sale of 3.5 million shares offered by Sunnova and 3.5 million shares offered by a fund affiliated with Newlight Partners.
In addition, both Sunnova and the Newlight Partners fund have each granted the underwriters a 30-day option to purchase another 525,000 shares of common stock. The share offering is expected to settle and close on Dec. 3, pending customary closing conditions.
Sunnova expects to raise as much as $142.6 million in net proceeds from the share sale if the underwriters exercise in full their option to purchase additional shares. The solar energy company will use the net proceeds from its part of the share sale to acquire solar equipment, for working capital purposes and to repay debt, which will include the redemption of about $39 million aggregate principal amount of its 9.75% convertible senior notes due 2025. (See Sunnova stock analysis on TipRanks)
The offering comes as the Houston, Texas-based company’s shares have exploded by an impressive 263% so far this year, helped by the renewable energy sector gaining traction. Meanwhile, the stock still scores a Strong Buy consensus from the Street backed by 8 unanimous Buy ratings. The average analyst price target stands at $38.25, indicating almost 6% downside potential over the coming 12 months.
In a bullish note, Goldman Sachs analyst Brian K. Lee last month upgraded NOVA from Buy to Conviction Buy and ramped up the price target to $44 from $38, as he sees a number of potential company-specific catalysts driving the stock.
The “catalysts we see driving further upside from here: (1) market share gain in light of higher growth rates (vs. peers), (2) battery storage momentum given the solid demand outlook, (3) strong financing visibility and access to lower cost capital via securitizations, and (4) potential clean energy policy catalysts under a Biden administration,” Lee wrote in a note to investors.
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