Roth MKM analyst Philip Shen maintained a Buy rating on Emeren Group (SOL – Research Report) yesterday and set a price target of $5.00.
Philip Shen has given his Buy rating due to a combination of factors including Emeren Group’s ongoing initiatives and financial guidance. Despite a challenging fourth quarter in 2023, where the company missed expected revenues and posted lower-than-expected gross margins due to delays and non-recurring costs, Shen anticipates a conservative yet realistic approach to the 2024 outlook. The implementation of Development Service Agreements (DSAs) in U.S. and EU markets is seen as a positive step towards enhancing revenue and earnings quality over time. Moreover, regulatory changes such as FERC Order 2023 are expected to bolster U.S. volumes, contributing to Shen’s maintained Buy recommendation and a $5 price target (PT).
Shen also adjusts his 2024 estimates, slightly increasing the revenue forecast while moderating gross margin expectations to align with the company’s guidance. He notes a reduction in operating expenses due to management’s cost-cutting efforts and a lowered tax rate assumption, which together improve the EBITDA and EPS estimates for the year. The strategic shift to DSAs is underscored as a key factor for Emeren Group, with successful sales already under this model and targets for significant expansion. Shen’s confidence in the company’s strategy, profitability outlook, and positive operating cash flow projections contribute to his positive stance on Emeren Group’s stock.
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Emeren Group (SOL) Company Description:
ReneSola Ltd. engages in the manufacture of solar wafers and modules. It operates through the following segments: Wafer, Cell and Module, and Solar Power Projects. The Wafer segment includes manufacture and sales of monocrystalline and multicrystalline solar wafers and processing services. The Cell and Module segment involves in the manufacture and sale of PV cells and modules. The Solar Power Projects segment offers solar power project development, EPC services, and electricity. The company was founded on March 17, 2006 and is headquartered in Putuo District, China.
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