Oppenheimer's Bullish Stance On SunPower No Longer Applies

SunPower Corporation SPWR reported Wednesday its fourth quarter results, which beat expectations on the top-and-bottom line. Management did highlight concerns with President Donald Trump's tariffs on imported solar panels.

The Analyst

Oppenheimer's Colin Rusch downgraded SunPower's stock from Outperform to Perform with no assigned price target (previous price target $13).

The Thesis

SunPower is based on California, but manufacturers its solar modules in Mexico, Malaysia and Philippines and is looking to secure a product exclusion from the recently imposed tariff, Rusch said in a note. While management is signaling a willingness to proceed "judiciously and proactively," investors may want to move to the sidelines for the time being.

SunPower is also conducting a strategic business review and some of the strategies under evaluation includes a postponement to a U.S. expansion and acceleration of international expansion, the analyst said. Management is likely to provide an update on its strategic review prior to its next earnings report, but investors are likely to see more clarity on manufacturing margins and tariff updates within the next 60 to 90 days.

The company does have "meaningful opportunities" to optimize its business, Rusch said. If the company obtains an exemption from the solar tariffs and communications a cost reduction plan, investors may want to get constructive on the stock at the time.

Price Action

Shares of SunPower were trading lower by 10 percent at $6.76.

Related Links:

A Look Ahead To Trump's Decision On Solar Tariffs

First Solar And Sunrun: A Renewable Energy Pair Trade From Credit Suisse

Posted In: Colin RuschOppenheimerSolarSolar TariffstariffsAnalyst ColorDowngradesAnalyst Ratings

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