Cowen’s Rob Stone Maintain’s OUTPERFORM rating on SunPower - Notes Q1 Could Be “The Trough”

Apr 24, 2009
Author: SCP Editor

April 24, 2009 – Analyst Notes – Cowen’s Robert Stone commented on SunPower’s (Nasdaq:SPWRA) results for the Q1, noting that the quarter is likely “the trough” for the company. He maintains an OUTPERFORM Rating on the stock, seeing a strong second half on identified commercial/utility projects with potential upside in the residential/components business. He sees an upside of 50% vs. the market in 12 months.

Financial Results

The company reported a 21% Y/Y decline in Q1 revenues to $214 million, with Tom Werner commenting that this was “the most challenging quarter” he’s seen since the company went public back in 2005. The company’s GM came in at 22.3%$ and a net loss of $4.7 million, or $0.06 per share, compared to net income of $11.9 million for the same period last year. Expectations were for earnings of $0.02 per share. Management forecast revenue in a range of $1.3 billion to $1.7 billion, with earnings of $0.25 to $0.75 per share.

Highlights

·         Signed 3-year 300 to 600MW supply agreement with FPL Group in April

·         Awarded 17MW power plant agreement with Xcel Energy in April

·         Announced 8MW power plant development agreement with Exelon in April

·         Received regulatory approval of 210MW PPW with PG&E

·         Booked more than $60 million in North American commercial systems projects

·         Began construction of company’s first Italian power plant with Api Nova

Stone’s Key Takeaways

·         Q1 missed expectations on shipments but ASPs held up better than expected

·         Visibility in commercial/utility business is good (130MW utility pipeline this year), while residential is “the swing factor”)

·         Cutting 2009/10E EPS to $1.25 and $2.40 on revenue of $1.3 and $2.03 billion, cutting module ASP to $3.24 and $2.90, cutting 2009E shipment to 366MW. Expect GM of 24.2% and 24.3%, respectively.

At yesterday’s closing prices of $25.93, the stock is trading at 2.13x Stone’s forecasted FY09 revenues and 20x his forecasted FY09 earnings, still, a premium relative to its peers (excepting First Solar).