Thursday, June 24, 2010

SunPower Sets World Record

SunPower Corporation (SPWRA: 13.46 -0.73 -5.14%) set a new world record by manufacturing a solar cell with sunlight-to-electricity conversion efficiency of 24.2% at its manufacturing plant in the Philippines.  This world record for large area silicon wafers was confirmed by the U.S. Department of Energy’s National Renewable Energy Lab. 
Looking ahead, SunPower seeks to establish itself as the leader in high performance solar power products. SunPower’s solar cells with higher conversion efficiency will lead to improved silicon utilization. Improved cell efficiency reduces the cost of energy by increasing energy production from each manufactured wafer into a SunPower solar cell.

For the same reason, increased efficiency reduces the cost per watt and cost per kilowatt-hour for feedstock and materials, depreciation and other manufacturing expenses, installation time, land and system operations, and related maintenance.

SunPower continues to invest in research and development to improve solar cell efficiency, lower manufacturing costs, reduce wafer thickness, improve throughput, processing yield and quality and introduce new products that enhance the efficiency and cost-effectiveness of solar power for end customers. SunPower has increased cell efficiency by a full four percentage points over the last five years while driving down manufacturing costs.

Headquartered in San Jose, California, SunPower designs, develops, manufactures, markets and sells high-performance solar electric power technology products, systems and services worldwide for residential, commercial and utility-scale power plant customers.

SunPower’s semiconductor-based solar cells and solar panels, which convert sunlight into electricity, are manufactured using proprietary processes and technologies.

The fundamentals of SunPower appear strong, given the revival of the alternative energy industry and specifically solar power energy, higher captive generation of panels, rising average conversion efficiency, declining silicon cost and assured silicon supply.

SunPower in fiscal 2010 expects revenues in the range of $2.00 billion – $2.25 billion with an adjusted EPS of $1.25 – $1.65.  The Zacks Consensus Estimate for fiscal 2010 presently stands at 83 cents. We are, however, apprehensive of the near-term performance of the company due to the modules glut in the market, subsidy risk in Germany and Italy, foreign currency risk and the volatile economic environment in Europe.

SunPower is trading at a premium compared to its peers like 
ReneSola Ltd. (SOL: 5.8501 -0.2099 -3.46%) and China Sunergy Co. Ltd. (CSUN: 3.6199 -0.2201 -5.73%) based on forward earnings estimates. The above peers, we believe, are more promising in the near term compared to the Zacks Rank #3 (hold) SunPower stock.

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