North Coast Solar Stocks

December 1, 2009

SunPower Gains On Pacific Crest Upgrade

Filed under: SPWR — Tags: , , — Jason @ 9:56 am

By Eric Savitz

SunPower (SPWRA, SPWRB) shares are trading higher this morning after Pacific Crest analyst Mark Bachman lifted his rating on the stock to Outperform from Sector Perform.

Bachman says the recent “accounting debacle” at the solar company – SPWR found irregularities in the accounting practices of its unit in the Philippines – has provided “a unique buying opportunity.” While conceding that the accounting issue results in considerable risk, he adds that “the current stock price assumes a lower margin profile on future revenue, and thus the formal result from the investigation remains the primary headwind to investing in SunPower.”

He thinks the company can generate 20% gross margins going forward. Bachman says investors should look to 2011 revenue and earnings estimates to value SunPower, “as the stock is fully valued on 2010 estimates.” (Uh, can I just say that this seems like an odd approach to valuing stocks? Company you like looks too dear based on next year’s estimates? No worries. Just look out one more year, and the multiples shrink!)

Bachman lifted his 2010 EPS estimate to $1.44, from $1.31 (he’s still below the Street at $1.79), while introducing a 2011 estimate of $1.93.

SPWRA today is up $1.28, or 6.2%, to $21.95.

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