While SunPower Corporation increased its second quarter revenue outlook from $500 to $550 million to $550 to $600 million, many analysts downgraded the stock because of a shift in the company’s core business.

SunPower stock dropped 4 percent in early trading on Wednesday, June 8, but rebounded by midday Thursday. The company hosted a conference call Tuesday to discuss first quarter results and its second quarter outlook.

SunPower CEO Dennis Arriola explained that the U.S.-based solar manufacturer expects to weather a European storm of shifting subsidies without casualties. But after Italy announced changes to its feed-in-tariff structure, SunPower said it would shift its focus in Europe from manufacturing and selling high-end solar panels for large utility-scale power plants to residential and small business rooftop installations.

While the shift shows the company’s flexibility, it also represents a move into a market with a lower profit margin, according to news reports.

As a result, several analysts downgraded their ratings for SunPower from buy to hold.

Arriola said in the Tuesday teleconference that he expects SunPower to make it through coming tough times for the solar industry without any problems.

One analyst on the call asked if an expected surplus of solar module inventory, expected to drive down the cost of modules, would dig into SunPower’s profit margin.

“We are partially immune to the module price drop,” Arriola said. “We sell modules, but we don’t just sell modules.”

Much of SunPower’s business revolves around services, trainings and market support, he said, that will continue to grow even as the price of solar modules drop.

Even if module prices drop as analysts anticipate, they will because of a surplus of solar inventory, Arriola said. He doesn’t expect SunPower to feel the crunch.

“We don’t have visibility in our downstream markets of large chunks of inventory,” he said.

All in all, SunPower executives remained positive in light of some rather dreary outlooks for the industry.

The company is scheduled to complete a tender offer with French oil giant Total on June 14. Total has pledged to buy a 60 percent stake in the company at $32.25 per share.