Shares of solar energy company SunPower (ASX:SPWR) declined by 3.8% to $5.41 after Raymond James downgraded the firm from ‘strong buy’ to ‘outperform’.

The research firm cited net energy metering (NEM) challenges in California as one of the reasons for the downgrade.

SunPower’s inventory levels were also noted as higher than those of its competitors, following supply chain disturbances which caused a buildup and double-ordering.

Moreover, Raymond James anticipates slow demand from China as a shift towards electric vehicles seems more likely under the new emission regulations.

The firm slashed the price target on SunPower’s shares to $9 from $17, a potential upside of 60.1% from the company’s last closing price.

In the meanwhile, out of 25 analysts covering the share, only 3 rated it as ‘buy’ or higher, 19 recommended a ‘hold’, and 3 suggested a ‘sell’; the median price target is $10.

Raymond James also downgraded TPI Composites and Tritium (ASX:DCFC) due to revenue and financing concerns.

SunPower’s shares have fallen by 69.9% so far this year.

The company is a solar energy corporation which aims to design, manufacture, and deliver high-performance solar electric systems worldwide.