- SunPower Corp (NASDAQ:SPWR) sees fourth-quarter FY21 revenue within prior guidance of $361 million - $421 million against the consensus of $379.5 million.
- SunPower sees $27 million of supplier-quality-related charges in Q4 and $4 million in Q1 of 2022 as it pursues recovery of costs from the suppliers.
- The company intends to fund the charges with cash on hand. The company held cash and equivalents of $280.8 million as of October 3, 2021.
- Excluding the charge, Q4 adjusted EBITDA results will likely be at the low end of SunPower's previously disclosed guidance range of $18 million - $41 million.
- The factors affecting Q4 adjusted EBITDA include $6.5 million of Residential EBITDA effectively pushed into 2022 due to weather in California and COVID impacts. Another $3 million was invested in sales and marketing to rapidly expand SunPower's serviceable solar market to more customers in underpenetrated areas nationally.
- Analyst Rating: JPMorgan analyst Mark Strouse lowered the price target on SunPower to $23 from $27 and reiterated an Underweight rating on the shares. The price target implies an upside of 21% to January 20, 2022, closing price of $19.02.
- The analyst believes investor expectations are low heading into the Q4 alternative energy earnings season.
- Near term, still challenging supply chain issues, geopolitical tensions, and a steady U.S. Investment Tax Credit over 2021 and 2022 will likely result in the delay of some utility-scale projects.
- While the analyst believes residential solar is "relatively more immune" to these challenges, he says near-term visibility "remains somewhat limited" until a final determination regarding potential changes to California's net metering policy.
- Strouse sees the space to remain volatile near term and generally expects visibility and margins to improve as the year progresses.
- Price Action: SPWR shares traded lower by 16.8% at $15.83 on the last check Friday.
