SunPower Announces Initial Public Offering SPWR Message Board

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Gold/Mining/Energy : SunPower Announces Initial Public Offering SPWR

SPWR 1.755

-2.5%

Nov 3 3:59 PM EST

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To: Sam who wrote (172)	5/3/2010 12:12:23 PM
From: Eric	of 196

From CS yesterday.. SunPower Corp. (SPWRA) PRE RESULTS COMMENT C1Q10 Preview - Positive Bias Bottomline. We think there can be a positive trade on SPWR shares into earnings. While long term cost structure needs to be addressed and keeps us Neutral, we feel the stock’s 30% decline YTD relative to peers which have been flattish has lowered the bar on stock performance. Key points. (i) Cost control – FSLR benefited last week from higher pricing as it had control over its costs, while WFR with its tolling exposure to China/Taiwan suppliers was impacted; SPWR has longer term stable suppliers for ingot (Woongjin Conway, Norsun, M Setek) and wafers, (Norsun, Space Energy, First Philec) none of these are from China/Taiwan; (ii) Solar market will transition from Germany in 1H to Italy/US in 2H – that plays into SPWR’s strength; (iii) Company likely has set a low bar on estimates, especially for Q1. Recall FSLR was able to beat 1H guidance by diverting panels from systems to channel, SPWR could do the same. Valuation. Longer term, we are maintaining our Neutral rating on the stock. SPWR has two key issues to sort out: (i) Its overhead opex costs in California, and (ii) Competitiveness with China based c-Si companies. Recently a senior management executive may have resigned, but we think core team is intact. We expect SPWRA can tighten CY10 EPS guidance to $1.45-$1.65 (street at $1.42) at the higher end of the range. SPWRA’s guidance embeds $1.37 Euro/$ rate, Europe macro may be a risk.

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