Sunnova Energy has managed to outperform its peers despite challenging macroeconomic conditions, but BMO thinks it’s time for investors to reduce their exposure to the stock. Analyst Ameet Thakkar downgraded Sunnova to market outperform. He also cut his price target on the stock to $25 from $27. The new price target implies an upside of 10.7% from Thursday’s close. The residential solar panel company outperformed both the Invesco Solar ETF and the S&P 500 in 2023. Sunnova shares rose 25%, while the fund lost 2%. The S & P 500 rose 18% year-over-year. NOVA YTD mountain Sunnova Energy shares “We remain constructive on NOVA and residential solar growth over the longer term. This means the macro backdrop for US residential solar remains challenging,” Thakkar wrote in a note on Friday. He noted that while dealer growth has allowed Sunnova to add customers despite less overall demand for residential solar, the effect could wear off over time. “Dealer growth has been a key driver of success in a difficult environment. NOVA’s dealer network growth has accelerated in recent periods as higher interest rates make it more affordable for smaller solar installation companies to join the NOVA platform, in part to offer solar leasing rather than 100% reliance on solar loans,” said Thakkar. “However, with the number of NOVA dealers reaching nearly 1,400 as of Q1 2023, we believe that future additions may not result in such an increase in capacity per dealer.” The analyst also expressed caution that the company’s debt issuance of about $1.7 billion in asset-backed securities issued starting in 2022 could weigh on the stock. Treasury yields are up 50 to 60 basis points higher than when Sunnova last issued ABS financing with a blended yield of 6.5%, Thakkar noted. Shares fell 2.1% before the bell on Friday. The company is expected to report quarterly earnings next week. — CNBC’s Michael Bloom contributed to this report.