Morgan Stanley’s Stephen Byrd believes the sales diversity and focus on systems put SunPower Corporation SPWR in a favorable position ahead of the tough oversupply environment in 2017. Byrd maintained an Overweight rating on the company, while lowering the price target from $39 to $27.
Sales Diversity
“SunPower has a robust 14+GW global project pipeline diversified across utility-scale, commercial, and residential systems, with the majority outside the end markets most at risk: China, Japan, and Europe. This sales diversity should help insulate the company from region-specific or segment-specific pockets of weakness,” the analyst mentioned.
Systems Focus
In addition, the company’s focus on system sales offers protection against module pricing pressure in the industry, and Byrd expects margins to continue to be more resilient than those of peers.
Underappreciated Relationship
Byrd also believes SunPower’s relationship with Total SA (ADR) TOT is an “underappreciated differentiator,” since it offers a competitive advantage, especially in the emerging markets.
“As solar installations continue to broaden from just a few key markets to less well-established regions, the relationship with Total will become increasingly important, in our view,” the analyst stated.
Mono Panels
SunPower also benefits from the technology evolution in mono panels, and Byrd expects the company’s existing high efficiency technology to continue to be a differentiator in the marketplace for its panels, while allowing SunPower to maintain its share of the space-constrained rooftop market.
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