What's Going On With SunPower Stock Wednesday?

SunPower Corp SPWR stock is trading higher Wednesday after Raymond James analyst Pavel Molchanov upgraded the stock rating from Outperform to Strong Buy with a $21 price target.

The analyst views the stock's excessive weakness due to the company's overweight to the California market.

SunPower, a solar energy company, has seen its stock lag behind its competitors, with a 46% decline year-to-date.

Despite the stock performance, SunPower has shown resilience and continues to grow in 2023, projecting 90,000-110,000 incremental customers, a 20% year-on-year increase.

SunPower has a notable exposure to California, with the state accounting for half of its customer additions in 2022.

The company's ability to adapt to changing market dynamics and its national footprint has allowed it to overcome the challenges in California and maintain growth.

SunPower operates through a network of local dealers for installation work, which ensures flexibility and avoids having "stranded assets" in physical infrastructure.

The decline in California residential new builds is temporary, and historical trends suggest that growth will resume from a lower baseline.

The recent underperformance of SunPower shares is viewed as a buying opportunity, considering the company's ability to adapt and its growth potential.

The introduction of California's NEM 3.0 is just one of many regulatory changes affecting residential solar adoption in the U.S.

Despite regulatory challenges, the penetration of rooftop solar in the U.S. is still relatively low compared to other countries like Germany and Australia.

Price Action: SPWR shares traded higher by 10.80% at $10.55 on the last check Wednesday.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.