On Jan 10, we have maintained our Outperform recommendation on
the solar company
Why the Reiteration?
SunPower is one of the most forward-integrated solar companies,
focused on moving up the value chain. Its customer base is spread
across North America, Europe, the Middle East, Asia and
Australia. In addition to a sizeable presence in the U.S., it is
already focusing on improving market share in France, Germany,
Italy, Spain and Japan, while gaining new market share in the
emerging solar markets of England, Greece, Israel and Malta.
Its third quarter 2013 earnings easily beat the Zacks Consensus
Estimate and the year-ago profit, backed by strong demand for its
solar panels in utility, commercial and residential projects. It
has also raised its outlook given the strength across regions and
end markets. Again, this well-known solar technology and energy
services provider delivered positive earnings surprises in 3 of
the last 4 quarters with an average beat of 123.11%.
Most of the U.S. states have renewable portfolio standards or at
least have set targets for the future. This will ensure a steady
uptake of solar power in the country. The high conversion
capacity of SunPower's solar panels will play a vital role in the
U.S. solar industry.
The company expects a 10% reduction in operating expenses in its
year-end 2013 results, which it expects to report on Feb 12.
Again, the recent EU/China trade agreement will likely help boost
prices that will make SunPower's EMEA or Europe, the Middle East
and Africa business more profitable. These initiatives will
position SunPower well for meaningful earnings growth.
SunPower's solar cells have one of the highest conversion
efficiencies available for the mass market. Higher conversion
efficiency has also led to improved silicon utilization.
Management also hinted that capacity expansion is on the cards
for 2014 to meet rising demand.
Other Stocks to Consider
SunPower currently holds a Zacks Rank #1 (Strong Buy). Other
attractive stocks in the solar space include
JinkoSolar Holding Co., Ltd.
First Solar Inc.
). While JinkoSolar and First Solar sport a Zacks Rank #1 (Strong
Buy), SolarCity carries a Zacks Rank #2 (Buy).
FIRST SOLAR INC (FSLR): Free Stock Analysis
JINKOSOLAR HLDG (JKS): Free Stock Analysis
SOLARCITY CORP (SCTY): Free Stock Analysis
SUNPOWER CORP-A (SPWR): Free Stock Analysis
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