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SunPower's Challenges Are Priced In At This Valuation

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SunPower's Challenges Are Priced In At This Valuation
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SunPower Corporation 2017 Q3 - Results - Earnings Call Slides (Seeking Alpha)

Oppenheimer upgraded SunPower Corporation (NASDAQ: SPWR) to Outperform from Perform, saying the company’s challenging operating conditions are priced in to shares. The upgrade came after the company posted “strong” fourth quarter revenue and maintained 2017 guidance.

SunPower, which has suffered from substantial module margin compression, reported fourth quarter non-GAAP EPS of $(0.64) versus consensus of $(0.46). Non-GAAP revenue was $1.097 billion versus Street view of $1.047 billion. Non-GAAP gross margin came in at (2 percent) compared to consensus of 3 percent.

For the first quarter, the company guided to non-GAAP revenue of $370-$420 million versus consensus of $459 million.

The company also maintained its FY2017 non-GAAP revenue outlook of $2.1-$2.6 billion versus consensus of $2.4 billion. Deployment guidance of 1.3-1.6 GW was also reiterated.

“We upgrade SPWR to Outperform from Perform incorporating the value of its dealer network, balance sheet support from Total, and potential to integrate technology serving the evolving needs of solar and renewables customers,” analyst Colin Rusch wrote in a note.

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Rusch is seeing more rational business behavior industrywide and expects SunPower to overcome pricing war by evolving its technology offerings, leveraging its global footprint and trusted brand.

The analyst also expects improving gross margin throughout 2017 with the ramp of the P-series and now projects FY17 non-GAAP EPS of ($1.97) (was ($1.31).

Shares of SunPower closed Wednesday’s trading at $7.25. In the pre-market hours, the stock is down 3.72 percent to $6.98.

Rusch has a price target of $10.

Latest Ratings for SPWR

DateFirmActionFromTo
Sep 2017Morgan StanleyDowngradesEqual-WeightUnderweight
Sep 2017Bank of AmericaMaintainsNeutral
Aug 2017Deutsche BankMaintainsHold

View More Analyst Ratings for SPWR
View the Latest Analyst Ratings

Posted-In: Colin Rusch OppenheimerAnalyst Color Earnings Upgrades Price Target Analyst Ratings Best of Benzinga

 

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