Why BofA Is Bearish On SunPower

SunPower Corporation’s SPWR valuation versus its residential solar peers seems expensive, according to BofA Securities.

The SunPower Analyst: Julien Dumoulin-Smith maintained an Underperform rating on SunPower and reduced the price target from $14 to $13.

The SunPower Thesis: SunPower's management said it would meet or exceed the previously issued 2021 guidance, Dumoulin-Smith said in a Friday note. 

“With the negative revision and volatility post results, we perceive this as underscoring just how priced to perfection SPWR already appeared to be with lower 1Q on back-end loaded year (elevated execution risk with steeper ramp) and even increased ’21 guide disappointing for investors, notably below consensus expectations on lower EBIDTA margin, with our own estimates having already been in-line with the guide,” the analyst said.

“Further, with SPWR guiding >40% Adj. EBITDA growth into ’22 as we reflect ~45%, we caution that this too was perceivably disappointing to investors implying negative revision relative to consensus,” he said.

SunPower also seemed unwilling to “confidently affirm” maintaining the revenue growth in 2021, according to BofA.

SPWR Price Action: Shares of SunPower were up 3.22% at $37.50 at last check Friday.