SunPower slammed by Wells Fargo sell rating as U.S. solar policy 'not supportive'

Jun. 29, 2022 3:53 PM ETSunPower Corporation (SPWR)FSLR, RUN, NOVABy: Carl Surran, SA News Editor14 Comments

Closeup of photovoltaic panels on a rooftop. Reflecting photovoltaic modules on a rooftop.

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SunPower (NASDAQ:SPWR) -10.8% in Wednesday's trading as Wells Fargo initiated coverage with an Underweight rating and $17 price target, citing U.S. policies that are "not supportive of solar growth" and a slowing housing market that is "likely to affect new solar sales."

First Solar (FSLR) CEO Mark Widmar said today that his company will not build a new factory in the U.S., citing uncertainties over trade policy and tax incentives.

U.S. policy "is not supportive of solar growth, in our view, with tariffs on Chinese solar panels, the Commerce Department's investigation into possible circumvention of the tariffs (AD/ CDV), revisions to net metering, the possibility the solar ITC (investment tax credit) could not being extended, and a lack of clarity on whether clean energy incentives in a Build Back Better bill will pass," Wells Fargo's Michael Blum wrote.

SunPower's (SPWR) "business is mostly direct sales, which we view as more sensitive to the economic environment given the large upfront cost of purchasing a solar rooftop system," according to Blum.

In addition to the slowing housing market, Blum is "neutral to negative on solar in the near term given inflation, interest rate pressure, supply chain constraints, and government policy headwinds."

The analyst also initiated coverage on Sunnova Energy (NOVA) and Sunrun (RUN) with Equal Weight ratings and respective $22 and $27 price targets; (NOVA) -5.2% and (RUN) -6.7% in Wednesday's trading.

Solar stocks also are lower after a Roth Capital analyst said new U.S. powers to detain imports tied to China's Xinjiang region have been used to halt products from an unnamed "major solar company."

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