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SunPower (SPWR) Buys Blue Raven for Cash Worth Up to $165M

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SunPower Corp. (SPWR - Free Report) recently acquired Blue Raven Solar for a cash consideration of up to $165 million. With Blue Raven being one of the fastest-growing residential solar providers in the United States, this acquisition should expand SunPower’s footprint in the residential solar market.   

Through this transaction, SunPower aims at combining its best-in-class products and digital marketing tools with Blue Raven's highly successful direct sales model to accelerate the go-to-market strategy.

Rationale Behind the Acquisition

The residential solar market in the United States continues to boom amid the challenges posed initially by the COVID-19 pandemic. Following a record 2019, the U.S. residential solar market installed 3.2 GW in 2020, another annual record. Year 2021 is on track to surpass the past year record as stated by Solar Energy Industries Association (SEIA).

The U.S. residential solar market is projected to witness a CAGR of more than 10% during 2021-2025 period, as per Technavio’s latest forecast. No doubt such projections are encouraging solar players like SunPower to expand their presence in this rapidly growing market, which must have played the role of a catalyst behind the company’s latest acquisition deal.

Benefits of the Deal

Blue Raven currently conducts more than 90% of its volume in 14 states that account for only about 5% of SunPower's sales. Thus, the acquisition will create a significant net-new geographic coverage opportunity for SunPower.
In fact, Blue Raven's geographic footprint is expected to provide SunPower a path to quickly expand its customer base in underpenetrated areas including the Northwest and Mid-Atlantic regions. This in turn should boost SunPower’s future top-line performance.

Moreover, SunPower expects that Blue Raven's volume will help expand its comprehensive suite of financial products and increase 2022 loan volume significantly. We thus expect SunPower’s balance sheet in 2022 to reflect the benefits of the aforementioned acquisition deal.

Peer Moves

In an attempt to expand their footprint in the growing U.S. residential market, other solar players are also taking significant initiatives.

For instance, in October 2020, Sunrun (RUN - Free Report) completed its acquisition of Vivint Solar for $22 billion. By adding Vivint Solar to its portfolio, Sunrun now owns more than 3 Gigawatts (GW) of solar energy capacity and more than 500,000 customers worldwide.

In June 2021, First Solar revealed its plans to invest $680 million for constructing a new solar panel factory in Ohio, which will manufacture enhanced thin-film photovoltaic (PV) solar modules. With an initial annual manufacturing capacity of 3.3 gigawatt-direct current (GWdc), the plant will eventually expand the company’s U.S. manufacturing footprint to 6 GWdc.  

In September 2021, Sunnova Energy (NOVA - Free Report) , one of the leading U.S. residential solar and storage service providers, partnered with AutoGrid to provide reliable demand response resources to Clean Power Alliance’s (CPA) Power Response Program. Through this partnership, Sunnova and AutoGrid will implement and scale a comprehensive distributed energy resources program, executing on a key component in CPA’s strategic Clean Energy Future plan.

Price Movement

Shares of SunPower have risen 45.3% in a year’s time against the industry’s 18.8% decline.

Zacks Investment ResearchImage Source: Zacks Investment Research

Zacks Rank

SunPower currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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