Credit Suisse Downgrades SunPower On Valuation, Disappointing Q1 Revenue

SunPower Corporation’s SPWR margin expansion could slow in late 2021 and 2022 due to rising rates, according to Credit Suisse.

The SunPower Analyst: Maheep Mandloi downgraded SunPower to Underperform, while keeping the price target at $23.

The SunPower Thesis: Although the company reported strong fourth-quarter results, management’s guidance of first-quarter revenues was disappointing, Mandloi said in the note.

“Q4 adj. EBIDTA $39M beat guidance ($26-36M), and CS/cons ($29/32M) due to stronger than expected DevCo gross profit across segments ($0.50/W vs guidance $0.36-0.40/W) despite higher opex," Mandloi wrote. "Management guided Q1 revenues $270-$330M, with the midpoint below prior CS/cons $321/$329M and flat Y/Y, due to a lumpy commercial business.”

The analyst raised the earnings estimate for 2021 from 23 cents per share to 35 cents per share to reflect “higher sales and profitability partially offset by higher expenses.” He reduced the earnings estimates for 2022 and 2023 from 60 cents per share to 58 cents per share and from 81 cents per share to 80 cents per share, respectively, to reflected higher opex.

Referring to the rising rates, Mandloi wrote, “Every 100bps increase in rates reduces NPV per customer by ~30%, reducing upside to 2022 EBITDA guidance.”

SPWR Price Action: Shares of SunPower had declined by 10% to $33.61 at the time of publication Monday.

(Photo: SunPower Corporation)