Citi Analysts Revise Ratings for Renewable Energy Companies

Citi analysts have revised their ratings for key renewable energy companies ahead of the third-quarter 2024 earnings, reflecting shifting market dynamics and potential election outcomes.

Upgrades and Downgrades

The bank upgraded First Solar (NASDAQ:FSLR) to Buy and downgraded Canadian Solar (NASDAQ:CSIQ) to Sell, citing differing outlooks for both.

First Solar received an upgrade with a price target increase to $254 per share. Citi sees FSLR as well-positioned irrespective of the U.S. election outcome.

> "We expect FSLR to benefit from either candidate winning the presidential election," the analysts noted. A Democratic victory could lead to a quicker recovery in FSLR shares, while a Republican victory might impose higher tariffs, resulting in long-term growth.

Conversely, Canadian Solar is facing more uncertainty, prompting the downgrade.

> "Higher domestic tariffs, potential liquidity strain from capex/CVD, lower PV volumes, and lower storage margins pose downside risks," Citi warned. They noted that either election outcome could challenge Canadian Solar, with potential for more tariffs under Republicans and increased capital expenditure pressure under Democrats.

Weakness in European Markets

Citi highlighted that the residential solar market in Europe remains weak post-summer.

> "Expectations for a post-summer rebound in residential solar demand in Europe were high, but we find few reasons for optimism," the analysts wrote, pointing out sluggish installations and decreasing app activity.

Sector Winners by Election Outcome

As Citi closely monitors election developments, it outlined potential sector winners for both scenarios. The analysts prefer FSLR, Array Technologies, and Sunrun (NASDAQ:RUN) in case of a Democratic win, while Generac and Oklo are highlighted for a Republican win.

The report noted that solar and hydrogen companies such as Plug Power (NASDAQ:PLUG) and Ballard Power may experience initial negative reactions if a Republican administration takes office.