The decline in demand for solar panels has affected SunPower (NASDAQ:SPWR), prompting Citi analysts to downgrade the stock to Sell from Hold. The firm also cut its price target on the company down to $4.50 from $10. Nevertheless, shares closed higher in today’s trading.
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Citi predicts that SunPower will add fewer residential customers this year, and the company’s strategic initiatives may take time to take off. Citi analyst Vikram Bagri said the solar energy provider’s stock is among the most crowded shorts in the U.S. stock market, and any business upside could result in sharp upswings.
However, Bagri said SunPower will have to reach its 2023 projections and 2024 expectations to see a change in market sentiments. The company has struggled to adjust to the slowdown in the solar energy market, leaving its stock nearly 70% down this year.
SunPower’s plan to restart its business includes cutting operating costs and investing in existing customer experience. Bagri said improved customer experience could leave operating expenses persistently high.
Morgan Stanley also downgraded SunPower to Underweight as the firm grew cautious about the stock. “We see risk of a potential near-term corporate capital raise to maintain its liquidity thresholds and see considerable downside to consensus EBITDA estimates in 2024 and 2025,” the analysts said in a report on solar stocks.
Is SPWR Stock a Good Buy?
Turning to Wall Street, analysts have a Hold consensus rating on SPWR stock based on two Buys, 11 Holds, and four Sells assigned in the past three months, as indicated by the graphic above. Furthermore, the average SPWR price target of $8.71 per share implies 48.89% upside potential.
