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Why Shares Of SunPower Corp. (SPWR) Aren't Shining Too Brightly Today
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Shares of SunPower Corporation (SPWR - Free Report) were battered by 30% Wednesday after the company released its second quarter financial results before the markets opened.
The company reported a loss of 33 cents per share, worse than the Zacks Consensus Estimate of 31 cents. Just last year the company reported earnings of 9 cents per share. Revenues came in higher than expected at $401.8 million, which surpassed the Zacks Consensus Estimate of $341 million by 17.8% and were 6.7% higher than revenues for Q2 last year.
SunPower Corp. also announced that it will be laying off 1,200 employees and take a restructuring charge between $30 million and $45 million. The company lowered its full-year guidance for revenue as well, saying it now expects revenue between $2.8 billion and $3.0 billion. The Zacks Consensus Estimate for full-year revenue is currently $3.32 billion. The company also said it expects to lose up to $175 million in 2016, compared to its expectation in May that it’d earn up to $50 million.
As a result of the earnings report and lowered outlook for the year, analysts at several banks changed their rating on SunPower’s stock, along with lowering their price target. Credit Suisse cut its rating to “neutral” from “outperform”, and slashed its price target to $12 from $32. In an analyst note CS said “The cuts are problematic in their own rights, but the bigger issue for the stock from here is management credibility and lack of apparent stability in their core business.”
Deutsche Bank also downgraded SPWR to “hold” from “buy”, and cut its price target to $11 from $37 previously. JPMorgan (JPM - Free Report) , Avondale, and Janney Capital all also cut their ratings on the stock to the equivalent of a “hold”. SunPower is currently a Zacks Rank #4 (Sell).
First Solar (FSLR - Free Report) was also weighed down by SunPower’s drop Wednesday, as shares of the company were down around 6%. Solar City was down less than a percent, despite a wider-than-expected quarterly loss in its earnings report. SunRun Inc. (RUN - Free Report) though too was down more than 4%.
Bottom Line
As SunPower CEO Tom Werner put it, “Certainly 2017 will be a difficult year in power plants. The power plant market is unlikely to improve in America in the next few quarters. It will in time.” If he is right, which it seems like he likely is, those in the industry will likely continue to struggle both financially and in regards to their share prices during the rest of 2016 and well into next year. Only time will tell, but the solar industry may be one to just watch for now , rather than one to buy into until things are start to look up.
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Why Shares Of SunPower Corp. (SPWR) Aren't Shining Too Brightly Today
Shares of SunPower Corporation (SPWR - Free Report) were battered by 30% Wednesday after the company released its second quarter financial results before the markets opened.
The company reported a loss of 33 cents per share, worse than the Zacks Consensus Estimate of 31 cents. Just last year the company reported earnings of 9 cents per share. Revenues came in higher than expected at $401.8 million, which surpassed the Zacks Consensus Estimate of $341 million by 17.8% and were 6.7% higher than revenues for Q2 last year.
SunPower Corp. also announced that it will be laying off 1,200 employees and take a restructuring charge between $30 million and $45 million. The company lowered its full-year guidance for revenue as well, saying it now expects revenue between $2.8 billion and $3.0 billion. The Zacks Consensus Estimate for full-year revenue is currently $3.32 billion. The company also said it expects to lose up to $175 million in 2016, compared to its expectation in May that it’d earn up to $50 million.
As a result of the earnings report and lowered outlook for the year, analysts at several banks changed their rating on SunPower’s stock, along with lowering their price target. Credit Suisse cut its rating to “neutral” from “outperform”, and slashed its price target to $12 from $32. In an analyst note CS said “The cuts are problematic in their own rights, but the bigger issue for the stock from here is management credibility and lack of apparent stability in their core business.”
Deutsche Bank also downgraded SPWR to “hold” from “buy”, and cut its price target to $11 from $37 previously. JPMorgan (JPM - Free Report) , Avondale, and Janney Capital all also cut their ratings on the stock to the equivalent of a “hold”. SunPower is currently a Zacks Rank #4 (Sell).
First Solar (FSLR - Free Report) was also weighed down by SunPower’s drop Wednesday, as shares of the company were down around 6%. Solar City was down less than a percent, despite a wider-than-expected quarterly loss in its earnings report. SunRun Inc. (RUN - Free Report) though too was down more than 4%.
Bottom Line
As SunPower CEO Tom Werner put it, “Certainly 2017 will be a difficult year in power plants. The power plant market is unlikely to improve in America in the next few quarters. It will in time.” If he is right, which it seems like he likely is, those in the industry will likely continue to struggle both financially and in regards to their share prices during the rest of 2016 and well into next year. Only time will tell, but the solar industry may be one to just watch for now , rather than one to buy into until things are start to look up.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>