SunPower in ‘even worse position’ than Sunrun, cut to Sell equivalent at GLJ (NASDAQ:SPWR)

SunPower (NASDAQ:SPWR) sinks as much as 4% in early trading Monday after GLJ Research downgrades shares to Sell from Hold with a $6.99 price target, calling the stock “the worst house on a bad street” in an “even worse position” than Sunrun (RUN).

GLJ’s Gordon Johnson has been vocally negative on Sunrun’s shares considering the 30-year fixed mortgage rate is up more than 210 basis points from February 25 (to 5.39%) “when Sunrun cut its discount rate from 6% to 5%, and the company’s equity cost of capital is currently ~15%, yet consensus is currently applying a 5% cost of capital in their nonsensical NPV model to value the company (which is patently absurd – i.e., RUN’s 30-year solar leases are nothing more than second mortgages, meaning the cost of capital should be substantially above 5.39%).”

While Sunrun’s (RUN) shares are “materially overvalued,” SunPower (SPWR) is “in an even worse position from a valuation perspective,” Johnson writes.

Following SunPower’s analyst day earlier this month, Bank of America recently upgraded shares to Neutral from Underperform.