Northland analyst Donovan Schafer said The Washington Post and The New York Times have reported on what “appears to be a clear and definite withdrawal” of Senator Joe Manchin’s support for climate related provisions in the hoped-for reconciliation bill and the analyst “wouldn’t be surprised” to see Sunworks (SUNW) and Sunnova Energy (NOVA) trade down on this news. However, Schafer thinks they could see a Q3 and Q4 benefit in their reported results, as could Array Technologies (ARRY) and FTC Solar (FTCI), as developers look to trackers as a way to “safe harbor” their projects at the 26% ITC rate and the “sense of scarcity driven by fears that the 26% ITC could disappear on 12/31/22 can be a powerful sales pitch” for residential solar projects. Schafer has Outperform ratings on the four solar stocks mentioned. He also would be a buyer of Generac (GNRC), Xos (XOS) and Lightning eMotors (ZEV) if they pull-back on the Manchin news, citing his view that they should be less affected in terms of fundamentals, but have “mistakenly” traded on this kind of news in the past.
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