Analyst Says Tenesol Deal Does Nothing to Address Fundamental Cost Problem at SunPower (SPWR)

Shares of SunPower (Nasdaq: SPWR) are continuing lower Tuesday as investors and analysts have dug a little deeper into Friday's deal to purchase Tenesol and the related private placement for TOTAL SA (NYSE: TOT) to purchase 18.6 million SunPower shares.

The honeymoon ended abruptly: after opening about 19 percent higher at Friday's open (marking a high at $6.99), the stock sold off by about 14 percent to close the session at $6. Shares are moving lower once again this week, currently down about 5 percent to $5.70.

Potentially weighing on investors decisions this afternoon is an earlier research note from Collins Stewart's Dan Ries. The analyst calls the deal "cash neutral." He points to a lack of financial details about the purchase as making it difficult to value the $165 million being paid as fair or otherwise.

Ries maintains a Sell rating and $8 price target on SunPower, saying the "acquisition does not address the fundamental cost problem at SPWR." The analyst notes the company's "cost structure is poorly positioned for the over-capacity induced harsh pricing environment expected in the solar industry in CY12."

To track all the market-moving analyst action on shares of SunPower, visit our Analyst Ratings section.

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