SunPower (NASDAQ:SPWR) shares fell 8.8% in early Tuesday trade after analysts at Citigroup and Morgan Stanley downgraded shares today.
Last week, California regulators postponed a decision to reduce incentives for installing rooftop solar panels on apartments, schools, and farms.
The California Public Utilities Commission has announced that the vote on the proposal to decrease solar credits, which was originally scheduled for Thursday, has been delayed until November 2.
This decision has been met with resistance from various stakeholders, including solar companies, housing advocates, and environmental groups, who have been actively lobbying against the proposed reduction in solar incentives.
“We downgrade SPWR to Sell/High Risk. 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,” analysts at Citi said in a downgrade note.
Similarly, analysts at Morgan Stanley cut the rating to Underweight as they grow “more cautious” on the stock.
“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,” the analysts said in a report on solar stocks.
SunPower shares are down nearly 68% year-to-date through Monday’s close.