Citi adjusts renewables ratings ahead of earnings

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

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

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

“We expect FSLR to benefit from either candidate winning the presidential election,” the analysts noted. They stated that a Democratic win could spark a sharper recovery in FSLR shares, while a Republican win may result in higher tariffs, driving longer-term growth.

Conversely, Canadian Solar faces more uncertainty, leading to a downgrade.

“Higher domestic tariffs, potential strain on liquidity from capex/CVD, lower PV volumes, and lower storage margins pose downside,” Citi warned.

The bank indicated that either election result could challenge the company, with more tariffs under Republicans and increased capital expenditure pressure under Democrats.

Citi also emphasized that residential solar markets in Europe remain weak following the summer.

“Expectations were for a post-summer residential solar demand rebound in Europe. We see few justifications for companies to be pounding the table,” the analysts wrote, noting sluggish installations and declining app activity.

As Citi tracks election developments closely, it outlined sector winners for both scenarios.

The analysts prefer FSLR, Array Technologies, and Sunrun (NASDAQ:RUN ) in a Democratic win, while Generac and Oklo are seen as standing out in a Republican win.

The report noted that solar and hydrogen companies such as Plug Power (NASDAQ:PLUG ) and Ballard Power could face initial negative reactions under a Republican administration.

Source: Investing.com