On Thursday, Mizuho Securities adjusted its outlook for Maxeon Solar Technologies Ltd. (NASDAQ:MAXN), reducing the share price target to $4 from the previous $7. The firm maintained a Neutral rating on the solar technology company's stock. The revision reflects concerns over the company's earnings before interest, taxes, depreciation, and amortization (EBITDA) and the likelihood of establishing a factory in the United States.
Maxeon Solar's fourth quarter 2023 revenues and non-GAAP gross margin percentage matched both guidance and Mizuho's estimates. Nonetheless, the first quarter 2024 shipment and revenue guidance did not meet expectations, which the firm attributes to a quicker than anticipated ramp-down of Maxeon 6 production.
While stable average selling prices (ASPs) through the fourth quarter were seen as a positive sign, Mizuho awaits further details regarding prices and margins that are anticipated to be disclosed in the fourth quarter earnings call.
The lowered price target is primarily due to a downward revision of the expected 2025 EBITDA. This adjustment was made to align with current spot module prices, which have had a negative $1 per share impact. Additionally, Mizuho has decreased the probability of a U.S. factory materializing to 25% from the previously estimated 50%, resulting in a further negative $2 per share impact on the price target.
InvestingPro Insights
Alongside Mizuho Securities' revised outlook for Maxeon Solar Technologies (NASDAQ:MAXN), InvestingPro data and tips provide additional context for investors considering the solar technology company's stock. With a market capitalization of $127.73 million, Maxeon Solar is trading at a low revenue valuation multiple, which could be a point of interest for value-focused investors. The company's revenue for the last twelve months as of Q3 2023 stood at an impressive $1217.84 million, showing a robust growth of 27.11%. Despite this, the gross profit margin during the same period was 12.14%, which reflects some of the concerns mentioned by Mizuho regarding earnings and margins.
Two InvestingPro Tips that are particularly relevant in light of the article are that Maxeon Solar is quickly burning through cash and that analysts have revised their earnings downwards for the upcoming period. These insights may explain some of the caution behind Mizuho's Neutral rating and the lowered price target. Additionally, with the stock trading near its 52-week low and not paying dividends to shareholders, these factors could weigh on investor sentiment.
For those looking to delve deeper into Maxeon Solar's financial health and future prospects, InvestingPro offers more tips, with a total of 12 additional insights available. These could provide further guidance on whether the current stock price reflects the company's intrinsic value. Interested readers can access these at: https://www.investing.com/pro/MAXN. Plus, use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, enhancing your investment research with valuable insights.
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