Analysts Identify 2 Trade Losers in Solar Sector

ENPH and SPWR are heavily shorted

Jun 3, 2019 at 10:14 AM
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Wall Street last week quickly named beer stock Constellation Brands (STZ) a loser on potential Mexico tariffs. More analysts are weighing in this morning, this time on the alternative energy space. Specifically, Credit Suisse analysts said Enphase Energy Inc (NASDAQ:ENPH) and SunPower Corporation (NASDAQ:SPWR) would be most impacted by the tariffs.

In the note released this morning, the brokerage firm noted that all of ENPH's microinverter shipments will come from Mexico by the end of this year, and SPWR's distributed generation module business has heavy Mexico exposure. According to Suisse's estimates, every 5% increase in tariffs on imports could cut into Enphase's earnings per share by up to 20%, and SunPower's adjusted EBITDA by 3.5%. As a result, the companies could move their respective businesses out of Mexico in the coming years.

Both stocks are already heavily shorted, with short interest accounting for about 30% of the float for each. That's interesting considering their technical performances in 2019. ENPH has actually jumped more than 200% year-to-date, last seen trading at $15.19 as it heads into a bullish time of the year. SPWR's year-to-date gain is 51%, and it was last quoted at $7.50.




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