Analysts Weigh In On Sunpower (SPWRA) Results
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Analysts are weighing on the Sunpower (SPWRA) earnings results this morning. Hat tip to Street Insider for the following analyst comments:
Piper Jaffray is maintaining a Neutral rating and is raising the price target from $22 to $25.
“SPWR provided in line FY10 revenue guidance but PF EPS guidance was below consensus; additionally 1Q10 guidance was much lower due to backend-loaded systems revenue. The stock will likely be weak near term on the below-consensus guidance; however, we believe that SunRay’s 1.2GW pipeline and EMEA presence should greatly increase SunPower’s visibility into 2010 and 2011 growth. We maintain our Neutral rating and slightly increase our PT to $25 on higher volume and better than expected margin outlook…We revised our 1Q10 revenue / PF EPS / GM estimates to $330M / $0.05 / 21.4% from $425M / $0.25 / 19.2%. We revise our FY10 estimates to $2.13B / $1.31 / 19.3% from $2.10B / $1.15 / 16.7%. We raise our FY11 estimates to $2.83B / $1.94 / 19.1% from $2.72B / $1.68 / 16.7%.”
FBR Research is remaining on the sidelines and has lowered the price target from $30 to $22.
“As expected, SunPower restated financial figures going back to 1Q08. On aggregate (pro forma), CY08’s gross margin declined from 28% to 27% while CY08’s operating margin declined from 19% to 17%. For the first three quarters of CY09 (pro forma), the gross margin declined from 22% to 20% while the operating margin declined from 9% to 7%.”
“We are reducing our CY10/CY11 pro forma EPS estimates from $1.93/$2.63 to $1.41/$1.83, versus CY10’s guidance range of $1.25 to $1.65. Our CY10/CY11 GAAP EPS estimates have also changed from $1.10/$1.81 to $0.19/$0.70, versus CY10’s guidance range of $0.05 to $0.35. Our price target has also been lowered from $30 to $22, which is based on 1.5x P/B, 1.0x EV/sales, and 7x EV/EBITDA.”
Brigantine Advisors maintains its Buy rating but has lowered the price target to $24.
“The fat lady has sung at least in regards to SunPower’s audit of accounting errors, and the magnitude of the financial restatements is relatively modest. In addition to the promised placement of tighter controls, we would hope the company would also revamp its communications with investors, who were provided about 3 minutes to digest the 30+ pages of the earnings release before the earnings conference call began…Our Q110 estimates go to $0.05/$337M from $0.48/$518M, for 2010 to $1.35/$2.17B from $2.30/$2.21B, and are introducing 2011 estimates of $1.72/2.76B…We are reducing our price target to $24, 18x our new 2010 EPS estimate. We think the likely pull-back in the stock will be a good entry point for investors.”
Sunpower (SPWRA) Reports Mixed Results, Guides Way Below
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Sunpower (SPWRA) reported a mixed quarter last night missing analyst estimates of .49/share, posting .47/share on revenues of $548 million which was well ahead of the estimate of $490 million. What’s hitting the stock this morning is the guidance and the restatement of the financials for 2008, 2009 which concludes the company’s investigation. It’s looking like a rough day for Sunpower, but maybe this clears the way for the stock to begin moving higher once it works through today’s gap down.
Looking ahead, the company only sees an EPS of .05/share this quarter on revenues of $330 – $350 million. Wall St was looking for .34/share on revenues of $427 million. It doesn’t get any better for the full year. The company expects EPS in the range of $1.25 – $1.65 on sales of $2 – 2.25 billion. While revenues are about inline with what Wall St is expecting the EPS is well below the estimate of 1.78 for the year.
Shares of SPWRA are down about 8% in premarket trading. There is support around 20, so it will be interesting to see if that level holds today.
Raser Tech (RZ) Beats Estimates As Company Starts To Generate Revenue
Raser Technologies (RZ) is moving higher in premarket trading after reporting better than expected results last night. The company reported a loss of .07/share which beat the estimate of -.11/share and is a big improvement over the year ago quarter when the company reported a loss of .17/share. That’s in large part due to the company now selling power from its Thermo plant to Anaheim, CA which is giving revenues a boost. The company reported nearly $1 million in revenues this quarter which is the 3rd straight quarter of improving revenues. All in all, a nice quarter from a company that has really struggled in the past year. With a new CEO on board and some revenues coming in from its Thermo plant, this may be a stock to watch in the coming weeks.
Raser Chairman Kraig Higginson commented: “We continued to grow in the fourth quarter 2010 and signed key deals that will keep us moving in the right direction. We expect that the partnership with Evergreen will allow Raser to begin capitalizing on the abundant geothermal resources the Company has acquired. We are also pleased to see the output at Thermo 1 continue to increase as we make improvements and modifications. We have progressed from raw land to an operating power plant in just over two years at our Thermo Resource. Although behind our initial aggressive timeline, it is still far ahead of anyone else in our sector, which certainly validates our premise of a modular, rapid deployment strategy. I am confident we now have the team in place to further refine the process and complete future deployments in a more streamlined manner.”
New CEO Nick Goodman indicated that the company is making final preparations to begin their next geothermal energy project at the Lightning Dock, New Mexico site and expects to begin drilling soon. However, it’s still pending permits and financing so soon could mean many months.. we’ll see.
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Trina Solar (TSL) Down On Secondary Offering
Trina Solar (TSL) is under pressure this morning after announcing last night that it intends to offer 7,900,000 ADS shares for sale with the option for underwriters to purchase an additional 1,185,000 shares. Proceeds will be used to expand manufacturing capacity, R&D and general corporate purposes.
Shares are down about 4% in premarket trading as the stock continues to trade below the 50 day moving average and showing technical deterioration. It looks like it may need to retest the area around the 200 day moving average in the coming weeks.
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STR Holdings (STRI) Smashes Estimates, Guides Higher
STR Holdings (STRI) impressed Wall St after the bell today smashing estimates and guiding higher. The stock is up about 4% in after hours trading after the company reported an EPS of .42/share which is nearly double the analyst estimates. Revenues also came in higher than estimates at $80 million vs the analyst estimate of $69 million. While that’s only a 6% improvement in revenues over the year ago quarter, it’s a huge EPS bump of nearly 200%.
STR is also guiding higher and sees Q1 sales about inline with what they reported this quarter at $77 – 81 million (vs analyst estimate of $66 million. They see Q1 EPS of .23 – .25 vs the estimate of .14/share. For the full year 2010, they estimate sales of $310 – 330 million and EPS of $1.05 – 1.10/share. Wall St estimates call for $314 million in revenue and an EPS of $1.00.
All in all, a very strong quarter but one that was aided by the coming reductions in Germany and Italy as well as a mild winter in Europe. CEO Dennis Jilot commented, “Our revenue grew sequentially by 42.3% as expected reductions to solar subsidies in Germany and Italy and a favorably mild winter in Europe drove stronger-than-anticipated demand during the quarter. As the only encapsulant provider with manufacturing and distribution capabilities in North America, Europe and Asia, STR’s global footprint continues to be a key differentiator for us. This quarter, utilization of our Malaysian plant enabled us to increase our market penetration in Asia, including an increase in sales volume in China. Gross margin improved to 43.8%, a 550 basis point expansion from the third quarter of 2009.”
Technically, shares of STRI look very strong having broke out of a cup with handle base on Tuesday and clearing all time highs today.
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Piper Jaffray Initiates Coverage On Green Plains Renewable Energy (GPRE): "Significant Earnings Growth Over Next 2 Years"
Piper Jaffray has initiated coverage on Green Plains Renewable Energy (GPRE) this morning with an Overweight rating and a price target of $19. Hat tip to Street Insider for the following analyst comment:
“We believe this vertically-integrated ethanol producer is poised to deliver significant earnings growth over the next two years through much-improved ethanol production margins and the potential for highly-accretive M&A activity. The company’s recent capital raise strengthens the balance sheet and positions GPRE to pursue internal expansion plans and acquisitions across business verticals (most notably ethanol facilities)…Favorable supply & demand dynamics have led to a resurgence in ethanol production margins since early 2009…We estimate that ethanol acquisitions (for a standard 110 million gallon facility) would add $0.30-$0.40 in EPS and $27-$33 million in EBITDA in year 1, assuming the purchase price is ~$1.00/gal of production…From a regulatory standpoint, the increase in the RFS mandate in 2010 and the potential for the EPA to lift the ethanol blendwall later this year present positive macro catalysts for the stock.”
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Piper Jaffray Responds To Barrons (FSLR, TSL, YGE, CSIQ, JASO, SOL)
According to Street Insider, Piper Jaffray has responded to a negative Barron’s article over the weekend saying that the article is another sign that the negative sentiment on solar stocks has been priced in already and that the sector is poised to rebound with better visibility in the second half of the year. They went on to say that the German feed-in tariff cuts should stimulate growth and reiterated their Overweight ratings on Yingli (YGE), Trina Solar (TSL), Canadian Solar (CSIQ), JA Solar (JASO), ReneSola (SOL) and First Solar (FSLR). They do agree with Barron’s in that the industry is in need of consolidation with the biggest and most efficient manufacturers increasingly benefiting.
Solar stocks didn’t recover much today on the analyst note and remain down across the board for the most part (STP and CSUN are a bit green)
Barrons Savitz On Solar: Supply Glut To Continue, More Firms To Fail (ESLR, ENER)
In a weekend piece over at Barron’s, Eric Savitz sees a rough road ahead for the solar industry as capacity continues to outpace demand for years to come. He highlights the fact that while demand has picked up ahead of the German solar subsidy cuts in a few months, capacity still outpaces demand and the situation will only worsen as the German subsidy cuts take place, putting some solar laggards out of business.
Its a natural evolution of any evolving industry and the solar industry is still in need of a shakeout. It’s actually amazing that so many solar companies managed to survive the financial collapse of 2008, but don’t expect many of these companies to survive in the years to come. Some will get bought out, some will go under, but the industry is in great need of consolidation.
Savitz points out that Lux Research analyst Ted Sullivan sees supply and demand coming violently back into parity through company failures and zombie firms in China, where much of the excess takes place. However, he doesn’t think US based firms are immune and singles out Evergreen Solar (ESLR) and the solar division of Energy Conversion Devices (ENER) as vulnerable.
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EnerNOC (ENOC) Inks 3YR Deal With PG&E For SiteSMART Smart Grid App
EnerNOC (ENOC) and Pacific Gas & Electric are joining forces to increase the energy efficiency of PG&E’s commercial and institutional customers. The 3 year deal will provide PG&E customers with EnerNOC’s SiteSMART smart grid application in Northern and Central California. The SiteSMART app combines advanced metering technology with data analysis software to provide insight into energy usage that EnerNOC can then use to make energy efficiency recommendations and provide a more comfortable environment in extreme weather conditions.
EnerNOC CEO Tim Healy commented on the deal: “Although the economy is beginning to rebound, most businesses are still operating within capital-constrained budgets. EnerNOC provides innovative applications to help customers drive energy efficiency results that have a considerable and immediate bottom line impact. EnerNOC’s unique ability to provide commercial and institutional customers with integrated energy efficiency and demand response applications gives customers a comprehensive approach to capture greater and more persistent energy savings over time.”
Shares of ENOC are flat today and still working on carving out a new base pattern.
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First Solar (FSLR) Sells 30MW Solar Plant To Southern Company (SO) & Turner Renewable
First Solar (FSLR) has found a buyer for its Cimarron I Solar Project out in Northern Mexico and they didn’t have to look far. It has announced this morning that Southern Company (SO) and Turner Renewable has purchased the 30MW solar plant which is expected to supply power to around 9000 homes beginning sometime this year. Turner Renewable was previously owned by Ted Turner and was purchased by First Solar in late 2007. Southern Company has been working with Ted Turner for some time to develop renewable energy properties in North America where Ted Turner is the largest individual land owner in the world.
First Solar is developing the project with construction to begin this month and will provide operation and maintenance services under a 25 year contract. The electricity generated will serve a 25 year power purchase agreement with the Tri-State Generation and Transmission Association which is a not for profit wholesaler supplier to 44 electric cooperatives covering customers across New Mexico, Colorado, Nebraska and Wyoming.
Financial terms of the deal have not been disclosed.
First Solar isn’t moving much premarket, but over the past couple weeks it’s quietly pushed off support around the 100 level to 115 and back into what will be a resistance area around the 50 day moving average.
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