Solaria enjoys best stock market session since June after earnings call
Although its business is in the energy sector, that’s what Solaria appears to have been missing from the stock market this year. But the renewable energy company is starting October with charged batteries And up nearly 5% on Tuesday, its best day since June and is currently the most bullish firm on the Ibex 35 at the moment. Cause? Half-year results were presented this Monday.
The renewable energy company provided figures that were slightly above analysts’ estimates for sales and EBITDAalthough data still shows its business declining year-on-year. In particular, revenue reached 83 million euros, compared with 77 million expected by the consensus of included analysts. Bloomberg and gross profit was 84 million (5% more than experts predicted).
Despite exceeding forecasts, Solaria lowered its EBITDA forecast for this and next yearnow set at €205-215 million for 2024 (down from €232-251 million previously estimated) and €245-255 million for 2025 (down from €297-325 million previously estimated). However, this reduction still exceeds the forecasts of experts, who estimate gross profit for the current year at 197 million and next year at 224 million.
Investors’ euphoria is driven less by the earnings report and more by some of the company’s new goals. The solar energy company announced that it plans to “generate even more revenue through the diversification of its business” in 2025, reaching a total of 250 million in cash and generate a total of 1000 million over the next four years. Solaria plans to achieve this goal through the rotation of assets in Spain and new agreements with data centers and a capital increase for Iandco Generia (its subsidiary promoting land for renewable energy). After all, as it recently became known, the company is seeking a partner’s entry into the subsidiary by increasing capital.
Regarding data centers from Banco Sabadell explain that “they want to bet on this activity and become a global supplier for these centers (renewable energy, infrastructure, etc.). They hope that this will be a relevant activity for the group in the coming years (€670 million cash generation in the period 2024/28). It currently has a connection capacity of up to 270 MW, and the goal is to obtain 1000 MW connection permits by 2025.
Moreover, thanks to the income that can be generated from these operations, Solaria is considering launching a share buyback programwhich also supports the action this Monday. “Although the company has not yet determined the exact terms that will trigger the buyback, the CEO himself has mentioned that he himself may start buying shares ‘aggressively’ because he believes Solaria shares are undervalued,” Barclays said.
Despite the optimism that is spreading among investors this Monday, the decline experienced by the company on the stock market continues to be the worst of the entire Ibex 35. And, after Monday’s rise, It continues to lose more than 35% of its market value in a year.
Expert consensus that gathers Bloomberg He also does not expect the company to be able to return to positive territory for the year in the coming months as They give it an upside potential of only 16%, given that its shares average €13.83.. In fact, since the start of the year, its average valuation has fallen almost 28% from the €19.30 that analysts set as their end-2024 price target. Currently its price is around 12 euros.
In fact, late last week, Solaria’s recommendation became sell for the first time since the end of 2022, although now the experts’ poster for their titles will again have to be retained. However, there are analysts who continue to be optimistic about the performance of renewable energy in the stock market. Banco Sabadell’s own research team on Tuesday reiterated its buy recommendation for the company’s shares. They do this with Renta 4 as well. In fact, on the latter’s side, they have set a price target for Solaria at €18.30, giving it an overvaluation potential of 53%. Only three analyst banks offer more attractive valuations than Renta 4: GVC Gaesco (€19), Oddo (€20.50) and Berenbeng (€21).
Similarly, analysts at Bank of America (BofA) advise taking a position on the Spanish renewable energy company. In their case, they also justify this recommendation based on these new agreements: “We already viewed these new ventures as a one-way tail risk, given the relative investor skepticism about the company’s move to a ‘data center’ and new cash earnings.” €260 million expected from both in the 24-25 period, as well as improved EBITDA forecasts, which are now 10% above consensus, and a possible share buyback. All this makes the company an ideal candidate for short-term investment. in our opinion,” they explain.
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