- Wells Fargo analyst Michael Blum initiated coverage of SunPower Corp SPWR with an Underweight rating and a price target of $17.
- SPWR is a pure-play residential solar provider with over 444K customers.
- The analyst mentions that SPWR's largely new management team has pivoted its focus to customer service, with plans to increase offerings and revenues per customer. SPWR employs primarily a direct sales model, which generates strong revenues and FCF, he added.
- Blum forecasts SPWR to grow revenue at a 10-year CAGR of 14%, driven by an acceleration of solar deployments.
- The analyst is optimistic about residential solar's long-term prospects, citing an enormous growth runway (only 4% penetration) and enhanced pricing power as electricity rates rise at an accelerated rate.
- Blum believes SPWR's predominantly direct sales business strategy is more vulnerable to a potential economic slowdown than residential solar provider peers with a higher mix of recurring revenue.
- Price Action: SPWR shares are trading lower by 10.52% at $15.18 on the last check Wednesday.
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