Why This BofA Analyst Takes A Shine On Maxeon Solar

While much of Maxeon Solar Technologies Ltd.’s MAXN recent stock performance has been driven by its proposed U.S. cell and module manufacturing facility and the sentiment around the U.S government's Build Back Better (BBB) program, the company’s underlying business is “slated for a turnaround” by year-end 2022, according to BofA Securities.

The Maxeon Solar Technologies Analyst: Julien Dumoulin-Smith upgraded the rating for Maxeon Solar Technologies from Neutral to Buy, while raising the price target from $22 to $23.

The Maxeon Solar Technologies Thesis: The company’s out-of-market polysilicon contract ends in 2022, while its U.S. P-Series manufacturing facility “would be operational and contributing to the EBITDA” by then, Dumoulin-Smith said in the upgrade note.

The “conversion of Max 5 into Max 6 would allow it to renegotiate product pricing with its U.S. (SPWR) and EU customer base,” she added.

“We grow increasingly confident on MAXN’s cash management strategy (securing customer advances +$50mn for 1Q22, renegotiating supplier payment terms etc.) and believe that its prepayment of the out-of-market polysilicon contract ($62mn) de-risks the balance sheet further, something the consensus of $220mn of CFF between FY22 and FY23 misses,” the analyst further wrote.

MAXN Price Action: Shares of Maxeon Solar Technologies rose by 4.08% to $17.86 Friday at publication.

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