Why Sunnova Energy International Stock Soared Today

Sunnova Energy International (NYSE: NOVA) stock posted double-digit gains in Thursday's trading. The solar energy company's share price closed out the day up 10.3% and had been up as much as 12.7% earlier in the session.

JPMorgan published new coverage on Sunnova Energy stock today. While the firm maintained an overweight rating on the stock, it actually lowered its one-year price target. But the new price target still suggests explosive upside potential.

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Sunnova stock surges on JPMorgan outlook

Before the market opened this morning, JPMorgan published a note that gave Sunnova stock the equivalent of a buy rating. The firm's analysts lowered their one-year price target on the stock from $14 per share to $11 per share, citing some uncertainty related to catalysts from the Inflation Reduction Act. But even with the downward target revision, a one-year pricing forecast of $11 per share still suggests upside of roughly 243% compared to today's closing price for the stock.

What comes next for Sunnova?

Sunnova stock has seen volatile trading over the last year, and it's down roughly 69% across the stretch even with today's valuation pop. The company's share price saw a big pullback in conjunction with President Trump's election win due to expectations that the new administration will be less supportive of the solar industry, but it's possible that these concerns will prove to be overblown.

With its third-quarter report, Sunnova's revenue increased 19% year over year to hit $235.5 million. The company also reiterated its guidance for cash generation of $100 million, $350 million, and $400 million for 2024, 2025, and 2026, respectively.

Despite expectations that the new Trump administration could tamp down Biden-era political tailwinds for solar, there could be other trends taking shape that actually pave the way for stronger-than-expected performance. In particular, power demands for artificial intelligence (AI) are emerging as a potential catalyst that could benefit solar companies. With the Trump administration facilitating large investments in AI data centers that consume massive amounts of power, it's possible that solar stocks could wind up seeing roundabout benefits even if some other positive catalysts are lessened or eliminated.

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JPMorgan Chase is an advertising partner of Motley Fool Money. Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends JPMorgan Chase. The Motley Fool has a disclosure policy.