DOE loan guarantee helps reduce Sunnova costs, says Credit Suisse

Credit Suisse analyst Maheep Mandloi reiterated an Outperform rating and $43 price target on Sunnova Energy after the company and the DOE Loan Program Office announced a $3B loan guarantee for residential solar loans. The loan guarantee will help reduce Sunnova’s cost of ABS by roughly 125 basis points for A tranches, which implies about 70-80 basis point reduction in asset level weighted average cost of capital versus the market, the analyst tells investors in a research note. The firm added that management benefits from lower cost of capital, which further helps them capture market share away from other loan providers.