SunPower's tariff exemption gives management the opportunity to again target commercial customers that were put on hold when talks of tariffs first started, Dumoulin-Smith said in the upgrade note. (See his track record here.)
In addition, the tariff exemption implies the company won't need to pay around $200 million in tariff fees through 2021 — an amount that translated to a weekly cash burn of around $2 million, the analyst said.
SunPower is finalizing the acquisition of SolarWorld Americas, and management plans on retooling the acquired 600MW module fab facility in Oregon to P-series module manufacturing, Dumoulin-Smith said. Doing so is cheaper than cell manufacturing, although the exact cost is unclear, the analyst said; BofA estimates assume an 18 cent-per-share impact.
SunPower's ongoing transition to "Next Generation Technology" is crucial to hold on to its industry leading efficiency and improving margins, Dumoulin-Smith said. While there are reasons to be cautious over the planned slow NGT investment ramp through internal cash generation, it could be accelerated from customer advances or partnership investments, the analyst said.
Shares of SunPower were trading down nearly 1 percent at $7.05 at the time of publication Thursday.
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Latest Ratings for SPWR
|Oct 2018||Bank of America||Upgrades||Underperform||Neutral|
|Sep 2018||Credit Suisse||Upgrades||Neutral||Outperform|
View More Analyst Ratings for SPWR
View the Latest Analyst Ratings
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