Shares of SunPower Corporation (NASDAQ: SPWR) jumped as much as 13.6% on Friday after the company signed a supply deal and investors took a second look at earnings. At 1:20 p.m. EST shares were up 9% on the day.
The big news in the lat 24 hours was a 64.4 MW supply agreement with La Compagnie du Vent, a subsidiary of Engie, in France. The agreement is for E-Series solar panels and while timing wasn't announced it's likely shipments will be in the next 18 months.
This is critical because E-Series is the oldest product line in the portfolio and doesn't have the same efficiency advantage as X-Series or the cost advantage of P-Series. It's kind of in no man's land and if SunPower can't keep the product going it could be forced to shut down its manufacturing plant and would lose hundreds of millions on polysilicon supply agreements. Just keeping product flowing through the system is good news.
A single supply agreement won't lead to a turnaround at SunPower, but it's a good sign for the module business short term. SunPower needs to keep its E-Series product going and expand margins for X-Series while it builds out the P-Series and Oasis business for utility projects, which has been the company's core problem of late. Today, the market is seeing bullish signs for where the business is headed, but expect the market to be volatile. Sentiment in solar can change rapidly, but long term, if SunPower can keep E-Series going and X-Series and P-Series products perform up to plan, the upside could be tremendous.
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