ENLT stock is undervalued, Roth says

Following a third quarter he described as “mixed” Roth MKM analyst Justin Clare has maintained his “Buy” rating on Enlight Renewable Energy (Enlight Renewable Stock Quote, Chart, News, Analysts, Financials Nasdaq:ENLT).

On November 20, ENLT reported its Q3, 2023 results. The company posted Adjusted EBITDA of $47-million on revenue of $58.3-million, a topline that was up from $56.3-million in the same period a year prior.

“Our third quarter results demonstrate continued year over year growth in profitability, as characterized by our Net Income and Adjusted EBITDA. Moreover, we continue to see robust project returns, accelerated portfolio growth, and deep access to capital, despite the higher interest rate environment,” said CEO Gilad Yavetz. We are uniquely positioned with our interconnection advantage to build large scale projects for utilities which urgently need power. This is enabling us to push PPA pricing higher, through the 1.8 GW of amendments secured in the last 18 months at an average price increase of 25%, and our newly signed PPAs. At the same time, our flexible procurement agreements have enabled us to capture the value of rapidly declining solar panel and battery prices. Declining project costs coupled with higher priced PPAs are pushing returns higher.”

The analyst summarized the quarter.

“ENLT delivered a mixed Q3 and reiterated 2023 guidance,” he said. “Lower merchant pricing impacted Q3 revenue, but project divestitures contributed $8mn to adj. EBITDA. ENLT announced some project delays including a one-year delay from 2025 to 2026 for its 1.2GW/824MWh CoBar project. As an offset, management is accelerating some projects previously planned for 2026. We lowered our EBITDA estimates for 2024 and 2025; however, project returns appear attractive with support from amendments to PPAs and equipment price deflation.”

In a research update to clients November 20, Clare maintained his “Buy” rating, but lowered his price target on ENLT from $22.00 to $19.00.

The analyst expects that the company will deliver EBITDA of $195.4-million on revenue of $265.1-million in fiscal 2023. He expects those numbers will improve to EBITDA of $273.2-million on a topline of $404.1-million the following year.