SunPower's stock just had its worst week on record, and this analyst sees more pain ahead

By James Rogers

SunPower's stock fell 74.75% last week - its worst week on record, according to Dow Jones Market Data

Mizuho Securities downgraded SunPower Corp. to underperform and cut its price target for the maker of solar-energy technology, citing the company's decision to change customer financing options, as well as balance-sheet constraints.

Shares of SunPower (SPWR) fell 74.75% last week, making it the stock's worst week on record, according to Dow Jones Market Data. The stock fell 55.01% on Friday and 40.08% on Thursday, its worst two days on record.

"We downgrade [SunPower] to Underperform after news that the company is stopping lease and PPA installations, the most favored financing options in the industry, likely due to balance sheet constraints," Mizuho analyst Maheep Mandloi wrote. "Recall that balance sheet constraints have been exacerbated due to [SunPower's] inability to raise capital without a 2023 10k filing, and a potential 6+ month further delay in 10k filing after its auditors resigned on June 27." Mizuho previously had a neutral rating for SunPower.

With a power purchase agreement, or PPA, customers agree to purchase the electricity generated by a solar system installed at their home instead of paying to rent the system.

Related: Oil and gas stocks rise after Trump vows to ramp up fossil fuel production

Mizuho reduced its SunPower price target to 50 cents from $4.

Susquehanna Financial Group suspended its coverage of SunPower early Monday, citing the challenges faced by the maker of solar-energy technology.

In a note released Monday, Susquehanna said it is suspending its SunPower rating and price target following the company's letter to dealers last week stating it will no longer support lease and PPA sales. "Going forward, our prior estimates, price target, and recommendations should no longer be relied upon," Susquehanna analyst Biju Perincheril wrote.

Susquehanna previously had a neutral rating and price target of 68 cents for SunPower.

Related: SunPower says it's tapping second tranche of previously announced loan

"The letter indicates a significant retrenching by SunPower driven by an environment where it has little access to capital without current financials and exacerbated by the industrywide demand weakness," Perincheril added. "With its financial auditor resigning earlier this month, it is unclear when the company can become current with its filings, which will include a restatement/re-audit of 2022 10K, and audited 2023 results and quarterly 2024 financials."

Of 21 analysts surveyed by FactSet, one has a buy rating, nine have hold ratings and 11 have sell ratings for SunPower.

Last month, SunPower was one of several heavily shorted stocks lifted by the meme-stock revival sparked by the return to social media of influential trader Keith Gill, also known as Roaring Kitty.

Solar stocks fell last week after Republican presidential nominee Donald Trump vowed to use fossil-fuel production to lower taxes and stop inflation during his speech at the Republican National Convention in Milwaukee.

Related: Shares of Faraday Future, SunPower, MicroCloud Hologram and other memes surge, lifted by another meme-stock revival

Trump also derided what he called the "green new scam" and promised to stop Democrats' climate-related spending.

SunPower shares are down 85.9% in 2024, compared with the S&P 500 index's SPX gain of 15.4%.

-James Rogers

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07-22-24 0938ET

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