Zacks SCR sees untapped value in SolarBank, which develops solar infrastructure projects. / Photo: Unsplash / American Public Power Association
SolarBank Corporation, a Canada-based but U.S.-listed micro-cap developer of renewable and clean energy projects, is significantly undervalued, Zacks Small-Cap Research (Zacks SCR) believes, with the shares worth more than double their current market quotes. Thanks to a sizable project pipeline and continued demand for solar energy, even the shift in U.S. federal energy policy under Trump is unlikely to derail SolarBank’s growth, Zacks SCR argues.
Details
Zacks SCR values SolarBank at $5 per share, implying 112% upside versus the closing price of $2.36 per share yesterday, April 14. Notably, this target price is the most conservative on Wall Street, according to MarketWatch. The consensus stands at $5.70 per share, for upside of around 140%.
Zacks SCR sees growth coming from SolarBank’s expanding solar project portfolio and increasing focus on energy storage.
To date, SolarBank has completed solar projects in the U.S. and Canada totaling 200 megawatts. The company’s pipeline, meanwhile, exceeds 1 gigawatt, according to Zacks SCR. It expects SolarBank to triple its total capacity within the next two years, factoring in assets it owns, operates, or stores through energy storage systems.
The company often sells completed projects while retaining operating responsibilities. One such partnership is with South Korea’s Qcells, a subsidiary of Hanwha Solutions. In January, SolarBank announced the $49.5 million sale of four sites to Qcells; however, it will continue as the engineering, procurement, and construction contractor and expects to retain operations and maintenance contracts post-construction.
Other growth drivers
“Despite the apparent shift in U.S. energy policy at the federal level, demand for renewable energy remains robust,” Zacks SCR argues. In the first days of his second term as president, Trump declared a “national energy emergency,” withdrew the U.S. from the Paris Agreement, and suspended leasing for wind power projects, CNBC has reported. He also froze up to $400 billion in funding meant to boost domestic clean energy production and consumption.
Still, Zacks SCR points to recent momentum in the sector: in the third quarter of 2024, solar installations accounted for 64% of all new electricity-generating capacity in the U.S. While “the overall solar market is forecast to grow modestly” in the next decade, Zacks SCR notes “pockets of exceptional growth” — particularly in utility-scale installations, community solar, and commercial solar deployments. Energy storage, meanwhile, is expected to be the fastest-growing segment across the board.
For the fiscal year ended June 30, 2024, SolarBank reported revenue of CAD58.4 million ($42.16 million), a 217% increase. Zacks SCR forecasts revenue to grow 23.3% in 2025 to $52 million and nearly 35.0% in 2026 to $70 million.