On Friday, Susquehanna Financial Group adjusted its outlook on SunPower (NASDAQ:SPWR) Corporation (NASDAQ:SPWR), a solar technology and energy services provider. The firm reduced its price target on the company's shares to $3.00 from the previous $4.50 while keeping a Neutral rating on the stock.
The adjustment comes as the analyst at Susquehanna revised installation projections for 2024 and 2025, citing a slower than anticipated recovery in residential demand within the U.S. market. According to the new estimates, installations for 2024 are expected to see a 14% decrease, with a 7% increase projected for 2025. These figures align closely with the firm's national forecasts.
The revised demand expectations are anticipated to lead to a 12% revenue decline in 2024, but a rebound to 7% growth is expected in 2025. The updated forecast also includes changes to cost estimates, which have resulted in modified EBITDA (earnings before interest, taxes, depreciation, and amortization) projections for the two years. The new EBITDA forecasts stand at a loss of $22.3 million for 2024, improving to a gain of $86.8 million for 2025. Previously, the EBITDA was estimated at a loss of $13.1 million for 2024 and a gain of $102.8 million for 2025.
The firm's decision to maintain a Neutral rating indicates that the analyst does not see significant movement in either direction for SunPower's stock in the near future. The new price target reflects the updated financial forecasts and the expected performance of the company in the coming years.
InvestingPro Insights
As SunPower Corporation (NASDAQ:SPWR) faces a shifting landscape in the renewable energy sector, the company's financial health remains a focal point for investors. According to InvestingPro data, SunPower's current market capitalization stands at $500.11 million, with a negative P/E ratio of -2.04, reflecting challenges in profitability. The last twelve months as of Q4 2023 have seen the company's revenue decline by 3.21%, with a significant quarterly revenue drop of 28.23% in Q4 2023. These figures are a testament to the difficulties SunPower has encountered in generating growth amidst a competitive market.
InvestingPro Tips suggest that SunPower may struggle with its debt interest payments and is rapidly depleting its cash reserves. Analysts also anticipate a sales decline in the current year, and the stock is known for its high price volatility. These concerns are echoed in the company's weak gross profit margins and the expectation that SunPower will not be profitable this year.
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