More risk clouds clean energy stocks after Trump win, BofA says

Investing.com - Uncertainty clouds the outlook around clean energy and sustainability stocks after the US presidential election, according to analysts at Bank of America.

Trump, the Republican candidate, secured an overwhelming victory over Democratic rival Kamala Harris, while his party also won a majority in the Senate, the upper chamber of the US Congress. The outcome of House of Representatives remains undecided, although Republicans are close to holding a majority in the lower chamber as well.

Shares in clean energy stocks in Enphase, a manufacturer of solar micro-inverters and battery energy storage, and renewable power firm SolarEdge (NASDAQ:SEDG ) both slid sharply on Wednesday after the results of the election began to emerge.

In a note to clients, the Bank of America analysts led by Dimple Gosai said the specific policy approach Trump's administration will take to clean energy in his second four-term in the White House remains unclear.

They anticipated there will likely be "reduced sector support and lower sentiment" until more details are given by the new administration. But the analysts argued Trump will likely aim to change the Biden-era Inflation Reduction Act, which provides grants and loans to clean energy names, and increase tariffs, potentially leading to inflated project costs.

These moves, they said, heighten "the risk of significant sector impact."

"The uncertainty around the future of federal support could make it harder for utility-scale solar developers to secure financing, increasing risk premiums and capital costs. In our view, utility-scale solar would still grow supported by the strong pipeline, especially in states with strong RPS mandates, but at a slower pace," the analysts added.

Enphase and SolarEdge were named by the analysts as two companies potentially at risk from a drawdown in federal support.

In separate notes on Thursday, analysts at Jefferies downgraded their rating of Enphase to "Underperform" and analysts at Piper Sandler lowered their outlook for SolarEdge to "Underweight."

Source: Investing.com