SunPower (SPWR): Spain Decline Dramatic, 2009 Estimates Too High

FBR, ever the bear on SunPower (SPWR), says investors are still too optimistic:

[L]ooking into CY09, we believe there are areas of concern that have yet to be discounted:

1) even the Spanish rooftop market appears to be declining dramatically as the government yesterday asked the regulators to put a cap of 200MW for rooftop and 100MW for ground mounted/solar farms (starting in CY09), which, on aggregate (300MW), is well below the expected 1,200-1,500MW of installation in CY08;

2) Italy/South Korea/Japan combined could account for 1.2GW in CY09, making up for the decline in Spain but not enough to show growth;

3) SPWR’s win at FP&L [Florida Power & Light] is NOT driven by ITC but by state-level subsidies, making it premature to conclude the U.S. utility scale market is about to take off.

Ultimately, SPWR see’s limited downside risk to CY08, but increased risk to CY09 because of the factors above and the new higher guidance:

If demand does not grow 50%-plus in CY09, we believe there will be massive excess capacity, leading to cancellations and/or ASP erosions > 20%, thus leading to downward EPS revisions!

FBR reiterates UNDERPERFORM on SunPower (SPWR), target $65.

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