SunPower
stock was falling Friday after Guggenheim cited concerns over the company’s long-term ability to generate cash, and what it means for shareholders.
Analyst Joseph Osha downgraded his rating of
SunPower
to Sell from Neutral and gave the stock a $1 price target on Friday. Osha’s downgrade of the stock comes one day after the solar company announced that it raised $175 million through a second-lien term loan from Sol Holding, a major shareholder.
This was a crucial step for the company, which had said in December that it might not be able to continue as a going concern.
“These developments, welcome though they may be, do not solve SPWR’s underlying problems,” Osha said in a research note. “Once 2024 is past, we do not believe that the company is likely to be able to produce free cash flow on a sustainable basis.”
SunPower didn’t immediately respond to a request for comment early Friday morning.
Truist Securities analyst Jordan Levy wrote that while he doesn’t recommend investors sell the stock, he is staying on the sidelines for now with a Hold rating and $3.50 price target.
“While the new financing should provide SPWR essential breathing room to work through profitability/cash flow headwinds, more tangible execution on profitability enhancement initiatives is needed in our view to gain comfort in the go-forward trajectory,” Levy said in a research note.
Osha added in his recommendation to sell the stock that he also has concerns with another part of the financing deal. SunPower agreed to issue to Sol Holding warrants to purchase 41.8 million shares of the company’s common stock for a penny each.
“Financing was very dilutive for equity shareholders,” Osha said.
SunPower shares were down 10% to $3.83 on Friday. The stock has fallen 76% over the past 12 months.
Other solar stocks were dropping.
SunRun
was down 2.9%,
SolarEdge Technologies
was off 1.1%, and
First Solar
declined 2%.
Write to Angela Palumbo at [email protected]
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