SOLV Energy Inc "PT to $50, Moving to Neutral" (Neutral) Windham

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SOLV Energy Inc "PT to $50, Moving to Neutral" (Neutral) Windham

SOLV Energy Inc UBS Research

UBS Research THESIS MAP Thesisa guideMapto our thinking and what´s where in this report

Pivotal Questions Q: Can SOLV outgrow the U.S. solar market?

Yes. We forecast SOLV’s revenue to grow 15% 5-yr CAGR 2025-30E, faster than our anticipated

flattish growth of the U.S. utility-scale solar market driven by exposure to the faster growing storage

market, recent backlog growth driving market share gains, and growth of the O&M segment.

However, we view the market growth opportunity as largely priced in given SOLV's highly contracted

$8.2bn backlog providing revenue visibility through 2027E.

Q: Is SOLV's pure-play market exposure a positive?

Yes. SOLV’s concentrated exposure to solar and storage is a net positive due to relatively high levels of

policy visibility in the solar and storage markets compared to strong AI-driven demand for solar. In our

view, investors increasingly view SOLV as preferred exposure to a rapidly growing U.S. storage

market. However, we expect industry growth to outpace SOLV's revenue and earnings growth (10%

5-yr EBITDA CAGR 2025-30E), leading us to a more cautious view given relatively elevated multiples

compared to SOLV's E&C peers.

UBS VIEW We downgrade SOLV Energy to Neutral from Buy. We continue to like SOLV's end-market exposure,

leverage to accelerating grid investment, and relatively high earnings visibility given SOLV's highly

contracted $8.2bn backlog. However, the current stock valuation now reflects our near-term positive

earnings outlook and supportive industry backdrop, in our view. The risk/reward balance for SOLV is

now more balanced, in our view, relative to the time of our initiation.