Solar Panels in a field in Woodstock, Vermont.
Dreamstime.com
Shares of SunPower and First Solar were dropping Tuesday, despite receiving an upgrade from Raymond James.
Analyst Pavel Molchanov is predicting secular growth in electricity market penetration in many countries as demand for solar power evolves and hardware becomes cheaper over time.
Molchanov upgraded SunPower (ticker: SPWR
) to Outperform from Market Perform and set a $26 price target. The stock took a hit in December after California unveiled a new metering proposal that would have been “rather harsh” for solar power companies, he said. It took another hit later that month upon the apparent demise of the Democrats’ social spending initiative that would have extended a key tax credit.
“We think that the stock’s reaction to these headlines was overdone,” Molchanov wrote, adding that the California proposal likely will be modified and that Congress could still extend the tax credit independent of the Build Back Better plan.
SunPower stock was down 2.9% to $20.94 Tuesday. The shares fell about 13% last year.
The demise of the Build Back Better plan put pressure on First Solar’s ( FSLR
) stock, which was exacerbated by two tariff decisions taken by the U.S. Commerce Department and Court of International Trade in November, wrote Molchanov.
The resulting pressure could be an opportunity for investors, Molchanov said, as it rebalanced the risk/reward equation. He upgraded the shares to Market Perform from Underperform.
“As commodity stories go, First Solar is large-scale and highly bankable,” he wrote.
First Solar stock was down 2.6% to $86.35 on Tuesday.
Molchanov also upgraded Clean Energy Fuels ( CLNE
) to Market Perform from Underperform; ReneSola
( SOL
) to Strong Buy from Outperform, and TPI Composite
s ( TPIC
) to Strong Buy from Outperform.
He downgraded Evoqua Water (AQUA) to Market Perform from Outperform; NextEra Energy Partners ( NEP
) to Market Perform from Outperform; and Xylem ( XYL
) to Underperform from Market Perform.
Write to Sabrina Escobar at [email protected]
