This solar stock is jumping after an upgrade from Bank of America

Published Fri, Dec 3 20219:09 AM EST

Shares of Maxeon Solar jumped more than 9% during premarket trading on Friday after Bank of America upgraded the stock to a buy rating, saying the company's ongoing turnaround is an "underappreciated aspect of the business." Analysts led by Julien Dumoulin-Smith added that while Maxeon would benefit from many of the provisions outlined in the Build Back Better framework, it is poised to do well even without policy support. "We believe too much of the focus and the recent stock performance has been tied to the sentiment and expectations around the BBB," Dumoulin-Smith wrote in a Dec. 3 note to clients. "MAXN still has an underlying core of the business that is slated for a turnaround by YE22," he added. The Build Back Better framework is the nation's most ambitious climate initiative to date, with $555 billion earmarked for green spending. The House passed the bill in November, although it's expected to face opposition in the Senate. Among the policies that could benefit Maxeon Solar are tax incentives and funding to modernize the electrical grid. Shares of the company are down nearly 40% for 2021 due to a mix of company-specific issues, including underutilization of its manufacturing lines, as well as general weakness in the clean tech space after a record 2020. Bank of America raised its price target on Maxeon by $1 to $23, which is 34% above where shares closed on Thursday. "We view the current valuation an attractive entry point for the 'barebones' business with introduction of new Max 7 panels, faster storage ramp, and BBB and other policy stimuli as a 'call option' to the Enterprise Value," the firm said. "While some investors have expressed concerns over the cash constraints, we believe that the core business is self-sufficient over the next twelve months in terms of the cash needs, which de-risks the balance sheet," Bank of America added. Maxeon manufactures solar panels. The company was spun out of SunPower in August 2020. - CNBC's Michael Bloom contributed reporting.

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