Friday, January 28

Renewable energies enter the stock market desert

2021 will go down in the annals of history as a disastrous year for the stock market performance of Spanish renewable energy companies. After signing an excellent 2020 in the stock markets, being considered a kind of refuge in the middle of the Covid-19 crisis, doubts have been primed with this sector.

It leaves almost 32,000 million euros of capitalization from the highs of January.

Specifically, Audax renovables gives up 35 percent of its market value this 2021; while Grenergy has fallen 23 percent so far this year.

Solaria loses 26 percent; Iberdrola fell 15 percent; Soltec plummets 52 percent and Siemens Gamesa plunges 35 percent.

Solarpack comes out of the bag after the TEQ takeover

Solarpack is also down 8 percent for the year, although it ceased trading on December 9 following the takeover of Veleta BidCo, the investment vehicle of the Swedish fund EQT.

Only Acciona’s sector subsidiary, Acciona Energía Renovables, stands out from this negative trend, by revaluing 14 percent since its debut on the market, at 26.73 euros, to the levels of 30.56 euros that it currently marks.

On the contrary, another rookie on the market, Ecoener, has not suffered the same fate, and has fallen from the 5.9 euros of its stock market debut to the 4.30 euros at which it is currently listed, which represents a decline of 28 percent.

The capitalization of the renewable sector sinks

Thus, the joint capitalization of the sector has gone from 114,100 million euros to about 82,170.

Among the companies with the most weight in the sector by market capitalization, Iberdrola stands out, with 62,782 million euros; followed by Siemens Gamesa, with 14,399; Solaria, with 2,173 million euros; Grenergy, with 823 million; Soltec, with 570; and Audax, with 550.

This poor stock market performance in the sector contrasts with the good performance of last year.

In fact, experts attribute this year’s puncture in part to that circumstance, as the fear of a stock bubble has spread in the field of renewable energies.

Likewise, regulatory uncertainty, the rebound in yields in the debt market (which makes the guaranteed profitability that renewables supposedly offer less attractive) and investors’ preference for riskier assets (coinciding with the reopening of economies ) have also played against him.

Solaria tries to catch up

However, the sector experienced an attempt to recover the stock market a couple of weeks ago, coinciding with the publication of some positive comments about Solaria.

Specifically, Credit Suisse began hedging the stock with a recommendation to ‘overweight’ and a price target of 21 euros, which has favored the stock to have been rising for three consecutive weeks.

In addition to Credit Suisse, RBC Capital upgraded its recommendation on the company from ‘worse than industry’ to ‘same as industry’ and raised its target price by one euro to 18 euros per share.

Solaria has upside potential

Taking both valuations into account, it continues to show revaluation potential as it is currently trading at around 17.46 euros per share.

As for the industry consensus, it is relatively bullish on the stock. Specifically, 52.6 percent recommend buying (10 analysts); 31.6 percent advise holding (6 analysts) and 15.8 percent prefer to sell the share (3 analysts).

As for Bloomberg’s consensus target price, it stands at 19.63 euros, which gives it a potential upside of 12.4 percent compared to current levels.