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On Monday, Piper Sandler adjusted its price target on SunPower (NASDAQ:) stock to $2.50 from $3.00. The company maintained its rating on the stock at “neutral.” The revisions follow the company's latest financial results and lead to a rebalancing of the company's gross margin (GM) and operating expenses (OpEx).
Piper Sandler analysts said the decision to lower the price target was based on a more accurate match with the results and guidance provided during SunPower's previous earnings discussion. This change reflects a more conservative estimate of the company's financial performance.
It was noted that the valuation methodology used by Piper Sandler, a seven-year discounted cash flow (DCF) analysis, was consistent with previous valuations, as was the discount rate of approximately 14%. DCF is a valuation method used to estimate the value of an investment based on its expected future cash flows.
SunPower, a company specializing in solar energy solutions, has come under intense scrutiny from investors as the renewable energy sector faces a variety of market pressures. The revised price target suggests a more cautious outlook on the company's ability to generate profits in the near term.
Piper Sandler's adjustment to SunPower's price target comes as analysts continue to monitor the renewable energy sector's growth potential and financial stability.
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