Last week, SunPower Corporation (NASDAQ: SPWRA, Stock Forum) updated its 2011 guidance, predicting that ex-items earnings per share would range between $1.75 and $2.05. Revenue for the upcoming fiscal year is predicted to arrive between $2.65 billion and $2.85 billion. Analysts surveyed by Thomson Reuters are expecting SPWRA to bank a profit of $1.86 per share in 2011, with revenue weighing in at $2.87 billion. Separately, SPWRA said it has struck a deal to sell its equity stake in an Italian solar project to a unit of Allianz SE.
In the wake of the less-than-impressive outlook, analysts at Wedbush cut their opinion on SPWRA to "underperform" from "neutral," and trimmed their price target on the equity to $7 from $11. The analysts are now in the bearish majority, with Zacks reporting more than twice as many "hold" or worse ratings as "buy" endorsements for SPWRA.
Elsewhere on the Street, short sellers also maintain a notable stake in the stock. Despite depleting by almost 5% during the past month, short interest still accounts for a healthy 13.2% of the security’s total available float. In fact, at SPWRA’s average daily trading volume, it would take almost nine sessions for all of these pessimistic positions to be repurchased.
In the wake of the disappointing revenue outlook and the subsequent downgrade, the shares of SPWRA have tumbled into the red, giving up more than 11% so far this month. What's more, the stock finished last week south of both its 10-week and 20-week moving averages for the first time in two months. This duo of trendlines ushered the security lower from October 2009 until just recently, and could resume their role as double-barreled resistance.
Furthermore, the equity could be staring up at yet another layer of potential resistance, thanks to an abundance of bullish bets in the newly front-month December series of options. More specifically, the December 13 strike houses more than 8,000 calls outstanding, which could serve as options-related resistance in the near term.
In conclusion, until SPWRA can flex some fundamental muscle or conquer multi-layered resistance on the charts, I wouldn’t expect too many analysts or short sellers to jump ship anytime soon.
Disclosure: Andrea Kramer has no financial interest in any of the equities or products mentioned in this column