Shares of a solar energy company Sun Power (NASDAQ: SPWR) surged in Monday trading, up 10.5% at 1:10 p.m. ET.
you can thank Bank of America for this – and not just Bank of America.
In a note posted to TheFly.com this morning, Bank of America reportedly withdrew its sell rating from SunPower shares and upgraded the solar stock to neutral.
BofA explained that SunPower’s analyst day last week laid out “a robust turnaround plan with specific milestones” that suggest SunPower will benefit from a “substantial turnaround” in its business. SunPower really needs a turnaround. According to data from S&P Global Market Intelligence, it has lost money in three of the past five years and burned money in all of them.
Bank of America isn’t the only analyst to be increasingly positive about SunPower, either. Friday last week, the two cowen and RW Baird raised their price targets on the solar stock – to $20 and $24, respectively. Cowen particularly liked SunPower’s plan to expand its business into electricity storage, virtual power plants and electric vehicle charging, and Baird echoed that sentiment.
Investors betting on a SunPower turnaround should be on the lookout for improved revenue growth in these areas. At the same time, the investment bank Morgan Stanley warns that SunPower’s new growth initiatives may be “capital intensive” – so better revenue may not translate to improved earnings.
For what it’s worth, Cowen and Morgan Stanley agree with Bank of America that — at least until we know more about the earnings picture — SunPower stock remains a hold — not a buy.
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