SunPower (SPWR 7.03%) spooked investors back in February when it warned that, "as a result of the time and effort that was required to complete ... restatements" of certain financial reports, it wouldn't be filing its required SEC 10-K Form on time this year.
Shares of the solar power company are trading down about 15% since that announcement, and on Friday, Susquehanna International's Biju Perincheril cut his price target by roughly twice that much -- by 33% in fact, albeit to a price target of $3 that implies the stock will go up 13% from its current price over the next 12 months.
Is SunPower stock a buy?
Yes, you read that right. SunPower's already said it lost nearly $250 million last year, and now it's saying the news might be even worse than that (though how much worse remains to be seen) -- yet Susquehanna thinks the stock will go up.
Most analysts who follow the company don't see SunPower earning profits again before 2026 at the earliest. Why, even Susquehanna, in its note covered on StreetInsider.com Friday, said residential solar demand in the U.S. is taking longer to recover than anticipated -- and probably won't start growing again until 2025.
SunPower's sales could decline a further 12% in 2024, with negative earnings before interest, taxes, depreciation, and amortization (EBITDA). The company burned $202 million in negative free cash flow last year and is expected to burn more cash this year -- adding to a debt load that's already approaching $300 million on a stock worth only $500 million today.
All things considered, this implies that 2024 will be a rough year for the company. While 2025 might be better, most analysts think it won't. And even if they're all wrong, and Susquehanna is right, SunPower has to survive this year before it can enjoy any benefits from a rebounding solar market next year. With solid profitability at least two years away, I'm not at all convinced that SunPower has the cash it needs to bridge the gap.
