SunPower and other solar names lifted by First Solar's better-than-expected results

By James Rogers

Solar-panel maker First Solar also shrugged off a Morgan Stanley price-target cut

Shares of SunPower Corp. climbed 7.3% on Wednesday, with the maker of solar-energy technology shrugging off a Morgan Stanley price-target cut, buoyed by strong results from solar-panel maker First Solar Inc.

Other solar stocks were also lifted by First Solar's (FSLR) better-than-expected second-quarter earnings. SunRun Inc. shares (RUN) ended Wednesday's session up 4.7%, Sunnova Energy International Inc. shares (NOVA) closed the session down 0.1%, but were up 13.9% in extended trading and Complete Solaria Inc. shares (CSLR) finished the session up 3.1%. First Solar shares ended Wednesday up 2.4%.

SunPower's (SPWR) stock snapped a four-day losing streak and registered its biggest gain since July 24, when it rose 7.5%.

Related: SunPower's woes spell good news for these solar names

Shares of SunPower had their worst week on record earlier this month after the company announced changes to its customer-financing options, the latest development in a turbulent spell for the company.

In a note released Wednesday, Morgan Stanley lowered its SunPower price target to 25 cents from $2 "to reflect ongoing operational challenges within [SunPower's] solar business."

"Recent reports have highlighted that [SunPower] has exited its lease and PPA business, an indication of a solar installer clearly adversely affected by the headwinds impacting the broader industry but also a reflection of the idiosyncratic challenges facing [SunPower's] operating model, which resulted in significant cash burn, tight liquidity, and limited access to capital given the various restatements and delays in filing audited financial results," Morgan Stanley analyst Andrew S. Percoco wrote. Morgan Stanley reiterated its underweight 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: SunPower's stock skyrockets despite company's challenges: 'Shorts dug themselves a hole here'

Raymond James downgraded SunPower's stock from outperform to market perform earlier this year, citing uncertainty around a going-concern statement disclosed by the company in December 2023.

Last week Mizuho Securities downgraded SunPower shares to underperform and cut its price target, citing the company's decision to change customer-financing options, as well as balance-sheet constraints.

Also last week, Susquehanna said it was suspending its SunPower rating and price target following the company's letter to dealers stating it will no longer support lease and power purchase agreement sales.

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

An SEC filing this week revealed that SunPower paid its chief financial officer, Elizabeth Eby, a $97,000 retention bonus. The bonus, which was paid as a cash lump sum on July 26, is not subject to repayment as long as Eby is still employed by the company on Sept. 30.

SunPower's chief legal officer, Eileen Evans, was paid a retention bonus of $373,000, according to an SEC filing. The bonus, which was also paid as a cash lump sum on July 26, is not subject to repayment as long as Evans is still employed by the company on Jan. 31, 2025.

Related: SunPower's stock continues rally, on pace for its best three-day stretch since May

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

Renewable-energy stocks fell earlier this month 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.

SunPower shares are down 82.3% in 2024, compared with the S&P 500's SPX gain of 15.8%.

-James Rogers

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07-31-24 1834ET

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