SunPower (NASDAQ:SPWR) stock has continued its dramatic descent after a letter to dealers halted new lease installations and shipments.
The stock, which surged during the pandemic, rising above $50 a share, is now hovering around the $1 mark. It has fallen around 90% in the last 12 months.
The company is said to have notified dealers that it will no longer provide support for new leases, installations, or product shipments.
Reacting to the news, analysts at Mizuho downgraded the stock to Underperform, saying the company is running out of time and cash. "We downgrade SPWR to Underperform after news that the company is stopping lease and PPA installations, the most favored financing options in the industry, likely due to balance sheet constraints," wrote the firm.
"Recall that balance sheet constraints have been exacerbated due to SPWR's inability to raise capital without a 2023 10k filing, and a potential 6+ month further delay in 10k filing after its auditors resigned on June 27."
Citi maintained a Sell rating on the stock, lowering the price target to $0.25 a share from $2.50. The bank spoke with an SPWR dealer regarding the letter.
"The language in the letter and feedback from the dealer indicates that the decision was abrupt and likely forced on SPWR," said Citi. "It appears that lease and PPA options have been ended for good after the company discontinued the direct business earlier this year.
Analysts believe the company will need significant opex reductions to recover from the loss of business. Citi see the decision as positive for both RUN and NOVA and modestly negative for ENPH.
Analysts at JPMorgan don't believe this is a temporary halt, "but rather an indefinite suspension of SPWR's future dealings." They added: "While likely aided by industry-wide factors, we believe the news is primarily company-specific driven by SPWR's weakened cash flow and balance sheet, as well as its inability to tap capital markets given its non-current SEC filing status."
The bank doesn't view this as a read-through for other companies in the sector.