SunPower, the first solar stocks were hammered in last year. Why it might be time to buy

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Solar panels in a field in Woodstock, Vermont.

Dreamstime.com

Actions of


SunPower

and


First solar

were down on Tuesday, despite the Raymond James upgrade.

Analyst Pavel Molchanov predicts secular growth in electricity market penetration in many countries as demand for solar power changes and hardware becomes cheaper over time.

Molchanov improved SunPower (ticker:


SPWR

) to outperform Market Perform and set a price target of $ 26. The action took a hit in December after California unveiled a new proposed measure that would have been “pretty tough” on solar energy companies, he said. It took another bang later this month when the Democrats’ social spending initiative apparently collapsed that would have extended a key tax credit.

“We think the headline’s reaction to these headlines was overblown,” Molchanov wrote, adding that the California proposal would likely be amended and Congress could still extend the tax credit regardless of the Build Back Better plan.

SunPower stock was down 2.9% to $ 20.94 on Tuesday. Shares fell about 13% last year.

The disappearance of the Build Back Better plan put pressure on First Solar (


FSLR

), which was exacerbated by two tariff rulings made by the U.S. Department of Commerce and the International Trade Tribunal in November, Molchanov wrote.

The resulting pressure could be an opportunity for investors, Molchanov said, as it rebalances the risk / reward equation. He improved the shares to Market Perform from Underperform.

“As the stories of commodities go on, First Solar is large-scale and very bankable,” he wrote.

First Solar stock fell 2.6% to $ 86.35 on Tuesday.

Molchanov also improved


Clean energy fuels

(


CLNE

) to Market Perform from Underperform;


Renesola

(


GROUND

) a strong buy from outperform, and


TPI Composite

s (


TPIC

) to a strong buy to outperform.

he downgraded


Water Evoked
(AQUA) to market performance from outperformance;


NextEra energy partners

(


NEP

) for Market Perform from Outperform; and


Xylem

(


XYL

) to underperform Market Perform.

Write to Sabrina Escobar at sabrina.escobar@barrons.com

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