A one-two punch for SunPower ahead of slashed solar incentives: 5 big analyst cuts
Investing.com -- Here is your Pro Recap of the biggest analyst cuts you may have missed today: downgrades at SunPower, BJ's Wholesale Club, DXC Technology, WEC Energy Group, and Kosmos Energy.
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SunPower shares plunge on Morgan Stanley downgrade
SunPower (NASDAQ:SPWR) shares tumbled nearly 9% premarket Tuesday after both Citi and Morgan Stanley cut the solar energy outfit to sell-equivalent ratings ahead of California regulators' anticipated decision to slash rooftop solar panel incentives for apartments, schools, and farms.
The California Public Utilities Commission announced that the vote on the decision, which was originally scheduled for this coming Thursday, has been delayed until November 2.
Citi, which downgraded the company to Sell/High Risk from a prior neutral rating, also cut SunPower's price target by more than half, to $4.50 from the prior $10.00: "A crowded short, we see room for downside as forward estimates need to come down, strategic initiatives will take time to implement, market share could be at risk, and liquidity remains tight,” wrote the analysts.
Morgan Stanley, for its part, cut SunPower to Underweight from Equalweight, also with a sharply reduced price target of $5.00 vs. the prior $8.00, given concerns on diminishing demand in certain US regions for SunPower and a lagging California recovery following NEM 3.0 - a new, vastly reduced net metering compensation rate for new solar customers in the state.
The analysts added, "We see risk of a potential near-term corporate capital raise to maintain its liquidity thresholds and see considerable downside to consensus EBITDA estimates in 2024 and 2025."
Morgan Stanley emphasized that, despite the downgrade, it is "bullish on the long-term prospects for residential solar."
Shares were changing hands at $5.28 in premarket trading.
BJ's Wholesale cut to Neutral at Goldman Sachs
Goldman Sachs downgraded BJs Wholesale Club (NYSE:BJ) to Neutral from Buy and trimmed its price target to $73.00 from $75.00, as reported in real-time on InvestingPro.
The analysts say they see limited potential for earnings surpassing consensus estimates for fiscal 2024.
They wrote that, although BJ’s club model holds promise for long-term unit growth, they foresee more appealing earnings growth opportunities at more attractive valuations within other sectors.
Shares were sliding 3.7% to $66 in premarket trading.
DXC Technology cut to Underperform
DXC Technology (NYSE:DXC) shares were plunging in the premarket Tuesday after Wolfe Research downgraded it to Underperform from Peerperform with a price target of $22.00.
Wolfe analysts expressed concerns about the tech services company's ability to increase revenue growth due to challenges in the IT services sector.
“Further, while we are constructive on the company's GBS business (notably analytics and applications), within GIS, Modern Workplace and Cloud/ITO remain structurally challenged, in our view,” added the analysts.
Shares were down 6.5% to $20.80 in the premarket.
Two more downgrades
BofA Securities downgraded WEC Energy Group (NYSE:WEC) to Neutral from Buy and cut its price target to $86.00 from $102.00.
Kosmos Energy (NYSE:KOS) shares were down 0.9% to $7.67 premarket Tuesday after Bernstein downgraded the company to Market Perform from Outperform and cut its price target to $9.00 from $12.00.
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