North Coast Solar Stocks

June 8, 2009

SunPower Falls as Analyst Sees Co. Losing PG&E Deal

Filed under: PCG, SPWR — Tags: , , , , — Jason @ 5:12 pm

Posted by Tiernan Ray

Solar panel maker SunPower (SPWRA, SPWRB) was the subject of both a news item and rumor today, and the rumor seems to have had the bigger impact on the stock, pushing it down 5%.

Hapoalim Securities analyst Gordon Johnson said in a note to clients that he thinks SunPower has lost its bid to provide 230 megawatts of solar panels to NextLight Renewable Energy LLC, a company formed by private equity firm Energy Capital Partners to provide alternative energy to utilities such as Pacific Gas & Electric (PCG). NextLight on Friday said it was selected by PG&E to provide solar power-based energy to Northern and Central California customers.

Writes Johnson, “We believe the key reasoning behind SPWRA’s out performance of the market in Friday’s trading session was speculation by the Street that the company signed a 230MW solar PV contract with NextLight. However, based on our sources, while SPWR did indeed bid for this contract, the company was not selected as the panel supplier for this project.” SunPower shares rose 5% on Friday.

Johnson goes on to cite his checks indicating that “a number of medium-sized customers” of SunPower “have indicated that the company has sold them faulty photovoltaic modules.” Johnson says quality issues probably are known in the industry quickly, and so the matter, if true, could cost SunPower some deals. He recommends initiating a short position in the stock and reiterates a “Sell” rating on the shares.

Meantime, SunPower today said it will outsource assembly of solar panels to contract electronic manufacturer Jabil Circuit (JBL) at factories in Mexico, for all panels target at North America. The company said it is the first step in its plan to “regionalize” assembly of solar panels. Jabil has been seeking ways to reduce costs over several years to contend with falling solar panel prices and to maintain operating margin at about 15% of sales, a goal it reiterated when it gave its Q1 conference call back on April 23.

SunPower shares today clearly reflected more of the bad rumor than the good news, with the stock falling $1.68, or 5%, to $29.89.

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