Solar stocks can’t seem to catch a break, and Wednesday is no exception after
SolarEdge
caught a downgrade and
SunPower
announced a new cost-saving plan.
Solar stocks were on the decline again Wednesday, with the
Invesco Solar ETF
falling 3.3%. One factor leading to the declines was the downgrade of
SolarEdge
Technologies stock to Underweight from Equal Weight at
Barclays.
Analyst Christine Cho also cut her price target on SolarEdge to $50 from $74, which implies a 31% drop from the stock’s closing price of $72.83 on Tuesday.
“As we have parsed through our numbers, we think the road to recovery
will be tougher for SEDG from the perspectives of top line, gross margins, and market share,” Cho wrote, stating that in the solar space she prefers
Enphase Energy,
but in general thinks it’s too early for traders to invest in solar. She rates Enphase as Equal Weight with a $106 price target.
Shares of SolarEdge were falling 4.9% to $69.30, which would be the stock’s lowest close since August 2019, according to Dow Jones Market Data. The
S&P 500
was down 0.6%.
Solar stocks have had a difficult run. In the past 12 months, the
Invesco Solar ETF
has fallen 48%. Financing home projects, such as installing solar panels, has become increasingly expensive as interest rates remain high. Demand has taken a hit, and solar companies continue to feel the pinch.
SunPower
is one of these companies that has felt the negative impacts of weakened demand for solar energy. In a filing with the Securities and Exchange Commission on Tuesday, the company announced a new restructuring plan meant to reduce operating costs following slower sales.
SunPower plans to execute the restructuring plan by the end of the third quarter of fiscal 2024, when it expects to incur restructuring charges of about $12.8 million, consisting of approximately $8.2 million in severance benefits. The company didn’t immediately respond to a request for comment from Barron’s regarding how many jobs were being cut.
On top of the restructuring plan, SunPower is nearing a Jan. 19 deadline for a temporary waiver on a loan agreement. Last month, the company said that it had breached a credit agreement after delaying the release of its third-quarter financial results.
In a research note Tuesday, Citi analyst Vikram Bagri wrote that support from
TotalEnergies,
a major stakeholder of SunPower, “is key to a favorable resolution of SPWR’s near-term liquidity concerns.”
“While SPWR stock would likely react positively to support from Total, solving NT [near-term] liquidity issues may not resolve LT [long-term] challenges faced by SPWR,” Bagri said. He cut his price target on SunPower to $3 from $4 and maintained his Sell rating on the stock.
TotalEnergies
didn’t immediately respond to a request for comment.
Write to Angela Palumbo at [email protected]
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