SunPower, a leading solar panel manufacturer, is facing challenges as the market for solar panels experiences a slowdown. The company’s stock is now predicted to add fewer residential customers this year, according to a bearish report by Citi.
Analyst Downgrades SunPower Stock
Vikram Bagri, an analyst at Citi, downgraded SunPower’s stock from Neutral to Sell. As part of the downgrade, Bagri also revised the target stock price down to $4.50, a significant reduction compared to the previous target of $10.
Declining Stock Performance
Following the bearish report, SunPower’s stock (ticker: SPWR) experienced a decline of 7.3%, reaching $5.37 by Tuesday morning. This drop adds to the company’s struggles in 2023, with its stock now down 70% year-to-date.
Challenging Times for Solar Companies
Solar companies, including SunPower, have faced a challenging year. The Invesco Solar ETF (TAN), which contains stock from both Enphase (ENPH) and SunPower, has seen a 33% decrease in value so far in 2023. One of the contributing factors to this decline is the decrease in demand for solar panels due to higher interest rates, resulting in increased borrowing costs and diminished discretionary spending. Additionally, states like Arizona, with lower electricity costs, have provided fewer incentives for consumers to switch to solar energy, as highlighted by SunPower’s CEO Peter Faricy.
Impact on SunPower’s Customer Acquisition
The aforementioned factors have had a negative impact on SunPower’s customer acquisition. In July, when the company released preliminary results for the second quarter, it projected adding 70,000 to 90,000 residential customers in 2023. This forecast represented a decline from the previous expectation of up to 110,000 customers.
In conclusion, SunPower is currently confronted with challenges due to the slowdown in the solar panel market. The downgraded stock rating by Citi and the decline in projected residential customer acquisition underscore the difficulties faced by the company in navigating these challenging times.
SunPower Faces Challenges Amid Weak Demand
SunPower, a leading energy company, is expected to release its third-quarter earnings on November 1. However, experts have expressed concerns about the company’s future prospects due to weak demand and the need for cost-cutting measures.
In a recent report, Bagri highlighted that SunPower’s new customer guidance range is heavily reliant on increased bookings in the second half of the year. Given the ongoing weak demand, there is a possibility of disappointing results. As a result, it is anticipated that the stock may experience further declines.
During a conference call in August to discuss the second-quarter results, Faricy, a representative from SunPower, revealed the company’s plan to reduce operating expenses in order to maintain its financial strength during market downturns. This includes layoffs of approximately 5% of its workforce and a delay in hiring for certain projects.
While Bagri recognized the company’s plan to cut costs, he warned that SunPower needs to continue investing in providing services to its existing customer base, which is a key strategic priority. Any drastic reductions in operating expenses could potentially jeopardize the company’s market share.
In preparation for the upcoming earnings report, SunPower has yet to respond to requests for comments from analysts.