Of the 18 analysts covering SunPower Corporation (SPWR) stock, 14 analysts, or 77.8%, gave the company a “buy” rating. Four analysts, or 22.2%, rated it a “hold.” There weren’t any “sell” ratings.
SunPower’s price target
Since the release of SunPower’s 4Q15 results, two of the 18 analysts covering the stock revised down the price target, and two analysts revised up their price estimates.
As of April 27, 2016, SunPower’s consensus 12-month target price stood at $35.49. This indicates a nearly 69% return potential considering a $21.05 closing price on April 28, 2016.
Analysts expect SunPower (SPWR) to report muted 1Q16 earnings. They see a nearly 13% decline in consolidated revenue on a quarter-over-quarter basis and a nearly 26% decline compared to the company’s 1Q15 revenue.
For 1Q16, analysts expect reduced EBITDA (earnings before interest, tax, depreciation, and amortization) and EBITDA margins. Intense pricing competition due to a supply glut of solar modules and cells across geographies decreased the profit margins of SunPower. Also affected were its peers SunEdison (SUNE), First Solar (FSLR), Trina Solar, and Canadian Solar (CSIQ). Moreover, analysts expect a decline in gross margins of the company’s residential solar segment on a year-over-year basis.
Among the major upstream solar (TAN) companies, analysts recommend a “buy” for SunPower. The recommendation was primarily due to the diversification of the company’s business and a strong near-term project pipeline.
Among the 18 firms covering SunPower stock, JPMorgan Chase (JPM) and Barclays are “overweight” on the stock with a price target of $36 and $32, respectively. Goldman Sachs (GS) gave a “neutral” rating on the stock with a price target of $31 assigned on February 18, 2016.
In the next part of this series, we’ll analyze analysts’ 1Q16 revenue estimates for SunPower. We’ll find out whether these recommendations are conservative or optimistic.