AmTech’s John Hardy is very bullish on SunPower (SPWR) and believes the stock is going to double within a year. Strong solar demand, SPWR’s geographic diversity, industry leading cell efficiency, and continued internal cell capacity ramp are the main drivers behind Hardy’s excitement.
AmTech Q2 preview:
We are expecting yet another solid report of in-line or better than expected results as strong demand continued through 2Q08 and into 3Q08 in the high-ASP region of Spain ahead of legislative unknowns in the Fall.
In addition, we view SPWR as better positioned to supplement any potential fall-off in Spanish demand in 2H08 given geographic diversity.
We view last week’s announcement regarding a 35MW aggregate deal with Florida Power & Light (FPL, NR) for ‘ 09 and ‘ 10 as yet another important example of SPWR ‘ s geographic diversity and integrated advantage.
We view commercial and power plant activities in the US as a main driver for LT solar growth following achievement of grid-parity
The Bulls Will Point To:
- Strategic acquisition of PowerLight allows the company to profit from a larger portion of the value chain.
- Best in class product within a high-growth industry.
- Significant revenue and earnings growth for the next several years.
- Current political/legislative environment pro-alternative energy.
The Bears Will Point To:
- Lumpy gross margin as a result of PowerLight.
- Lumpy revenue outlook for PowerLight segment.
- Reliance on government subsidies.
- Cypress Semiconductor (CY, $24.40, Buy/D. Freedman) is a substantial shareholder that could possibly sell its stake in the company.
AmTech reiterates BUY on SunPower (SPWR), target price $164.
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