SunPower Stock Surges after Strong Q3 Earnings

California-based solar panel maker SunPower (SPWR) surprised investors with strong third-quarter earnings on October 30. It reported EPS of $0.07, beating analysts’ consensus estimate. SunPower reported losses for the last six straight quarters. In the third quarter, it reported a net income of $10.64 million on revenue of $492 million. Its stock opened more than 20% up today.

UBS cut SunPower’s target price from $15 to $11 on October 31. So far this year, SunPower stock has soared more than 70%.

SunPower keeps its guidance

Despite a strong third quarter, SunPower has maintained its earnings guidance for 2019. It expects fourth-quarter revenue in the range of $520 million–$720 million, in line with the consensus estimate. Given the midpoint of its sales guidance, SunPower is expected to generate revenue of around $2 billion in 2019, suggesting an increase of 11% YoY.

SunPower saw a solid demand surge in distributed generation markets during the quarter. The company is in the transformation phase from utility-scale solar to residential solar and storage. It deployed 586 MW (megawatts) of solar power during the third quarter, an increase from 346 MW in the third quarter of 2018. In the second quarter of 2019, it deployed 622 MW of solar modules. It aims to deploy approximately 2.2 gigawatts of solar power in 2019. SunPower continued to make improvements in its Maxeon 5 solar panels during the quarter. Its production will likely ramp up in the fourth quarter.

First Solar’s third-quarter earnings

Peer First Solar (FSLR) also reported profits in the third quarter after a disappointing second quarter. It reported EPS of $0.29 and missed consensus estimates. The stock has tanked more than 5% following its third-quarter earnings. So far this year, First Solar stock has soared 22%.

Solar stocks have been notably strong in 2019. The Invesco Solar ETF (TAN) is up more than 50% so far this year. SunPower makes up almost 3% of TAN.

SunPower stock was trading in the oversold zone with a relative strength index of 25 on October 30. This figure indicates that the stock might see a trend reversal in the short term.

SunPower: Analysts’ price targets

SunPower stock offers an estimated upside of almost 23% based on its current market price of $8.40. Wall Street analysts have given the stock a mean target price of $10.31. Of the total 12 analysts tracking SPWR, three recommend “buys,” five recommend “holds”, and four recommend “sells.”

Analysts have given First Solar stock a mean target price of $72 against its current market price of $51.85. This target indicates a potential upside of 39% for the next year. Among the 16 analysts covering FSLR, eight recommend “buys,” three recommend “strong buys,” and five recommend “holds.” No analysts recommend “sells” as of October 31.

Solar inverter maker and top-rallying solar stock Enphase Energy (ENPH) reported its third-quarter earnings results on October 29. Read more in Enphase Energy Looks Weak despite Solid Q3 Earnings.