SunPower’s Rating Slashed at Susquehanna

Susquehanna analysts revised their rating for SunPower (NASDAQ:SPWR) from Positive to Neutral and set a new price target of $4.00.

The analysts explained that the downgrade and price target adjustment are mainly due to the slow recovery in California, where SunPower has significant market exposure. They noted that SunPower's recent financial restatements and the breach of covenant on its warehouse facility should be resolved soon. This resolution is expected to enable the company to negotiate a long-term agreement with its lenders for its term loan and revolving credit facilities. The recent settlement with Maxeon is also likely to provide more operational flexibility.

However, the analysts pointed out that SunPower's relatively weaker financial position may put it at a disadvantage compared to its peers, particularly as the California market shifts from solely solar to a combination of solar and storage solutions. As a result, they slightly reduced their estimates for customer additions in 2024 and 2025, predicting a year-over-year decline of about 7% for this year, which is below the performance of peers. This adjustment leads to an anticipated revenue decrease of 10% year-over-year in 2024, with a rebound to 9% growth in 2025.