Shares of ReneSola Ltd. (SOL) have underperformed the overall market substantially year-to-date. The stock has dropped 45%, while the has risen by 20%.
But, there could be catalysts which will trigger a rebound. Therefore, I’m bullish about this stock. (See SOL stock charts on TipRanks)
Headquartered in Stamford, Connecticut, ReneSola develops and builds solar power projects that it sells to its customers of growing photovoltaic markets in the U.S., Europe and China.
From the Q2 Earnings Report
Due to the timing of a project sale, revenue sank 29.3% on a year-over-year basis to $18.53 million in the second quarter of 2021, missing analysts’ projections by $2.22 million.
The adjusted earnings per American Depositary Share (ADS) was $0.11 which is 37.5% higher than the 2020 quarter. This exceeded the consensus average of $0.05.
The adjusted EBITDA grew by 33% to $10,000,000 year-over-year.
As the company holds $286million in cash, its balance sheet is strong. However, $12 million of short-term exposure to debt makes the situation even more fragile.
Market Growth Perspectives
The photovoltaic sector will play a crucial role in the ecological transition of the world, because it allows energy for domestic and industrial users without releasing greenhouse has emissions into the atmosphere.
Government incentives should be offered to encourage solar panel installation.
ReneSola plans to sell a 12 megawatt project to Spanish customers before 2021 ends. Many projects are expected to be finished in Italy this year.
The governments reformulated their policy of carbon neutrality and promoted the use solar energy.
Allied Market Research expects the global solar power market to be worth $223.6billion in 2026. That’s a huge leap from 2018’s $52.5billion.
According to the company, full-year revenue for 2021 will be $90 to $100 million, which is a significant increase from its current value of $52.5 billion in 2018. Gross margins are expected to surpass 30%.
Wall Street’s Take on ReneSola
In the past three months, three Wall Street analysts issued 12-month price targets for ReneSola. SOL average target price is $11.35, which suggests 62.6% upside.
Based on three Buys and one hold, the analyst consensus rating is Moderate Buy.
The stock hasn’t performed well recently, but this may have created an interesting opportunity in a company with good prospects.
Disclosure: Alberto Abaterusso didn’t hold any positions in the securities discussed in this article at the time it was published.
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