Sunnova Energy Stock In Focus On Adoption Of Tax Asset Preservation Plan: Retail Remains Bearish

At the end of December, Sunnova had $1.4 billion in U.S. federal net operating loss carryforwards which can be used to set off against future taxable income.

Sunnova Energy International Plc. (NOVA) stock will be in focus as markets open on Monday after the company announced a tax asset preservation plan.

The initiative aims to allow Sunnova to carry forward its net operating losses (NOL) and other tax attributes to be set off against future income under terms of the Internal Revenue Code (IRC.)

At the end of December, Sunnova had $1.4 billion in U.S. federal NOL carryforwards which can be used to set off against future taxable income.

However, the company said its ability to do so would be “substantially limited” if its “5-percent shareholders” increased the ownership of the value of the company’s stock by 50 percentage points over a three-year rolling period under Section 382 of the IRC.

Such an increase is classified by the IRC as an ownership change for the purposes of NOL availability.

Sunnova said its tax asset preservation plan has been put in place to prevent this from happening. It would deter any person or group from acquiring beneficial ownership of 4.9% or more in the company.

“Sunnova believes that the adoption of the Tax Asset Preservation Plan is in the best interest of the company, given the potential value that the significant NOLs represent,” the company said.

Earlier this month, William Berger stepped down as Sunnova’s CEO, and Paul Mathews, the company’s chief operating officer, succeeded him.

Sunnova did not specify the reason behind Berger stepping down as the CEO, but this comes days after the company issued a going-concern warning in its latest 10K filing with the U.S. Securities and Exchange Commission (SEC.)

Retail sentiment remained in the ‘bearish’ (36/100) territory, with message volume at ‘low’ levels at the time of writing.

Data from Koyfin shows the average price target for Sunnova is $2.18, implying a 599% upside from Friday’s closing price.

Of the 22 analyst calls, there’s one ‘Buy’ rating, 18 ‘Hold’ recommendations, and three brokerages have a ‘Sell’ or ‘Strong Sell’ recommendation.

Sunnova’s stock has fallen nearly 91% year-to-date, while its one-year performance is worse, with a decline of about 95%.

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