Is SunPower's stock in for a brighter outlook in 2022?

SunPower [SPWR] stock began the new year riding a recent mini surge, after receiving a welcome upgrade from broker Raymond James.
Jan. 10, 2022
Unlock Free Stock Insights + 50% Off Discount Code!
Join thousands of savvy investors and get:
  • Weekly Stock Picks: Handpicked from 60,000 global options.
  • Ten Must-Have Stocks: Essential picks to hold until 2034.
  • Exclusive Stock Library: In-depth analysis of 60 top stocks.
  • Proven Success: 10-year track record of outperforming the market.
Sign up to our mailing list now and enjoy a 50% discount on premium services!
By submitting your email address, you consent to us keeping you informed about updates to our website and about other products and services that we think might interest you. You can unsubscribe at any time. Please read our Privacy Policy and Terms of Use.

Solar stocks struggled across the board in 2021 - our ETF performance scanner shows Solar, represented by the Invesco Solar ETF [TAN], is the fourth-weakest performer across more than 30 themes, having dropped -26.48% over the last year to 4 January's close.

Solar installer SunPower's stock itself dropped -18.60% in 2021, but perhaps this could be the year that secular trends make solar a theme to watch, and in turn provide the backdrop to enable California-based SunPower Corp to record some consistent growth.

So, what's the wider view of the solar sector among analysts, and are there any tailwinds that could make 2022 a better year for SunPower?

What's happening with SunPower stock?

It's almost a year since SunPower stock hit its 52-week high at $57.52, back on 29 January 2021. Can this solar stock regain those levels? The stock certainly made a solid start to the year, moving off its pre-Christmas 52-week low at $19.34 recorded on 20 December, gaining 15.56% by 4 January, as the shares reached an intraday high of $22.35.

However, SunPower stock fell back on Wednesday 5 January, losing 8.13% to close back below the $20.00 level, at $19.78. This follows a disappointing December, where Sunpower's shares plunged 27.15%, to $20.87.

December setback looks overdone

Raymond James' Pavel Molchanov is one analyst bullish on solar over the longer term, after upgrading SunPower stock from Market Perform to Outperform earlier this week, despite recent headwinds. Molchanov also upgraded fellow solar stock, First Solar [FSLR], to Market Perform from Underperform.

According to Barron's, Molchanov is predicting secular growth in electricity market penetration across multiple countries, based on two key factors: evolving demand for solar power, and as solar hardware becomes cheaper over time.

Molchanov's positive outlook comes despite SunPower stock taking a double hit in December, along with other solar stocks, after California unveiled a new metering proposal for solar power companies, in addition to, "the apparent demise of the Democrats' social spending initiative that would have extended a key tax credit", report Barron's.

According to Molchanov though, "the stock's reaction to these headlines was overdone", after the stock fell close to 30% last month. The Raymond James analyst's positivity stems from his view that the California proposal is still likely to be modified, and that Congress could extend the tax credit separately to the 'Build Back Better' plan.

SunPower widens the net to capture fast-growing market

In December, the company launched financial services arm SunPower Financial, as it aims to make renewable energy affordable to more American homeowners. It will offer a 0% interest rate to certain customers, as it looks to take advantage of the US residential solar market, which is predicted to quadruple by 2030, with roughly one in eight American homes having solar, according to research consultancy Wood Mackenzie. It means that homeowners can opt for solar with no initial payment, as well as lower monthly payments, higher credit limits, and a faster application process, according to the firm's December press release.

As part of the company's focus on the residential solar sector, SunPower is in advanced discussions regarding a potential sale of its commercial and industrial solutions (CIS) business, reports PV Tech. The sale, which could be confirmed in Q1 2022, should help SunPower to optimise capital deployment, while also giving CIS the opportunity to fight climate change on a larger scale, said CEO Peter Faricy.

What's next for SunPower stock?

SunPower was upgraded by Raymond James to an Outperform rating on Tuesday, while Molchanov has put a $26.00 price target on SunPower stock, pointing to a potential upside of 31.44% from the stock's $19.78 Wednesday close.

A number of other analysts have also made recent rating changes, most recently Morgan Stanley, who raised its price objective on SunPower from $26.00 to $27.00 and gave the company an Underweight rating on 1 December.

Overall, SunPower stock has three Buy ratings, along with five Hold and five Sell ratings, according to MarketBeat, giving the company an average rating of Hold. With an average price target of $27.08, analysts give SunPower a consensus potential upside of 36.91% based on Wednesday's closing price.

SunPower has had a difficult time recently, but the company is making strategic changes to enable it to capture a residential solar market which is expected to grow rapidly. While its 52-week high north of $50.00 remains a mere speck on the horizon, imminent changes at both an organisation and industry level could offer the stock an opportunity to make up some of that lost ground as the year unfolds.


Disclaimer Past performance is not a reliable indicator of future results.

CMC Markets is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.

The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although we are not specifically prevented from dealing before providing this material, we do not seek to take advantage of the material prior to its dissemination.

CMC Markets does not endorse or offer opinion on the trading strategies used by the author. Their trading strategies do not guarantee any return and CMC Markets shall not be held responsible for any loss that you may incur, either directly or indirectly, arising from any investment based on any information contained herein.

*Tax treatment depends on individual circumstances and can change or may differ in a jurisdiction other than the UK.


Unlock Free Stock Insights +50% Off Discount Code!
Join thousands of savvy investors and get:
  • Weekly Stock Picks: Handpicked from 60,000 global options.
  • Ten Must-Have Stocks: Essential picks to hold until 2034.
  • Exclusive Stock Library: In-depth analysis of 60 top stocks.
  • Proven Success: 10-year track record of outperforming the market.
Sign up to our mailing list now and enjoy a 50% discount on premium services!
By submitting your email address, you consent to us keeping you informed about updates to our website and about other products and services that we think might interest you. You can unsubscribe at any time. Please read our Privacy Policy and Terms of Use.

The Home of Successful Investing.

© 2024 MyWallSt Ltd. All rights reserved.


Services

Content

Social

Company

Support

Resources


This website is operated by MyWallSt Ltd (“MyWallSt”). MyWallSt is a publisher and a technology platform, not a registered broker-dealer or registered investment adviser, and does not provide investment advice. All information provided by MyWallSt Limited is of a general nature for information and education purposes, and you should not construe any such information as investment advice. MyWallSt Limited does not take your specific needs, investment objectives or financial situation into consideration, and any investments mentioned may not be suitable for you. You should always carry out your own independent verification of facts and data before making any investment decisions, as we cannot guarantee the accuracy or completeness of any information we publish and any opinions that we publish may be wrong and may change at any time without notice. If you are unsure of any investment decision you should seek a professional financial advisor. MyWallSt Limited is not a registered investment adviser and we do not provide regulated investment advice or recommendations. MyWallSt Limited is not regulated by the Central Bank of Ireland. MyWallSt Limited may provide hyperlinks to web sites operated by third parties. Your use of third party web sites and content, including without limitation, your use of any information, data, advertising, products, or other materials on or available through such web sites, is at your own risk and is subject to the third parties' terms of use.