SunPower Corporation (NASDAQ: SPWR) stock continues to decline in pre-market trading on Monday, following a dramatic 55% drop on Friday. The plunge came after the solar company announced it is pausing some of its operations, including deactivating lease and power purchase agreements (PPAs) from its sales platform and halting new product shipments.
SunPower (NASDAQ: SPWR), once a pandemic-era high-flying stock with prices soaring above $50 per share, has now fallen below the $1 mark. Over the past year, the stock has plummeted about 90%.
Analysts Downgrade SunPower Stock
In response to the news, analysts at Mizuho have downgraded SunPower stock to Underperform, citing severe balance sheet constraints. Mizuho wrote:
“We downgrade SPWR to Underperform after news that the company is stopping lease and PPA installations, the most favored financing options in the industry, likely due to balance sheet constraints.”
The firm further noted that balance sheet issues worsened due to SunPower’s inability to raise capital without a 2023 10-K filing and a potential for further delays in this filing after its auditors resigned on June 27.
Citi also issued a bearish outlook on the stock, maintaining a Sell rating and lowering its price target from $2.50 to $0.25 per share. After discussing the letter with the SunPower dealer, Citi said,
“The language in the letter and feedback from the dealer indicates that the decision was abrupt and likely forced on SPWR. It appears that lease and PPA options have been ended for good after the company discontinued the direct business earlier this year.”
Analysts believe SunPower will need significant operational expense reductions to recover from the business loss. Citi sees the decision as potentially beneficial for competitors Sunrun (NASDAQ: RUN) and Sunnova Energy (NYSE: NOVA), while it may have a modestly negative impact on Enphase Energy (NASDAQ: ENPH).
Moreover, JPMorgan analysts view the halt as an indefinite suspension of SunPower’s future dealings rather than a temporary pause. They noted,
They commented,
“While likely aided by industry-wide factors, we believe the news is primarily company-specific, driven by SPWR’s weakened cash flow and balance sheet, as well as its inability to tap capital markets given its non-current SEC filing status.”
JPMorgan believes this situation is specific to SunPower and not indicative of broader sector issues.
SunPower (NASDAQ: SPWR) Stock Price Action
As of 09:17 a.m. (Eastern Time) Monday, SPWR stock traded at $0.6599, marking a 2.85% decrease compared to the previous trading session.
