Solar power has become a cause celebre for plenty of investors out there, and energy stock SunPower (NASDAQ:SPWR) has been right in the midst of it. In fact, SunPower shot up today, adding just over 10% to its value at one point in Wednesday afternoon’s trading. What sparked this explosive growth? An analyst reconsidered, and gave SunPower plenty to smile about.
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Raymond James, by way of analyst Pavel Molchanov, hiked SunPower from Outperform to Strong Buy, and also gave the stock a price target of $21. The reason? A combination of factors, starting with California’s new net-metering plan (NEM 3.0), and the overall performance of SunPower stock up until the new policy kicked in. Molchanov noted that the new net-metering policy was going to be a downside overall. However, solar power systems are starting to gain ground, and that means SunPower has plenty of room to add on new customers.
SunPower, Molchanov also noted, has an unusually high exposure to California. Likely with good reason; California is one of the best states in the U.S. when it comes to sun exposure. Other states might like to get in on solar power as well, but they’re simply not equipped. Despite the Californian focus, though, SunPower is growing in other places. SunPower looks to end up with between 90,000 and 110,000 incremental customers, which is an increase of 20% in year-over-year comparisons.
Despite this, analysts are largely taking a wait-and-see approach to SunPower stock. With two Buy ratings, two Sells, and 10 Holds, it’s clear analysts want to see more in either direction before making a clearer call. With an average price target of $15.11, meanwhile, SunPower stock offers investors a compelling 43.22% upside potential.