SunPower Earnings Give Solar Investors Hope

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Like most sectors, the coming crop of quarterly earnings reports from solar companies will be watched closely. There are arguments for and against the health of solar power in the imminent recession.

On the one hand, companies needing capital may be stretched, silicon may be expensive and prices for solar panels may fall. On the other hand, solar power may be a beneficiary of state and federal fiscal stimulus plans.

In that respect it was very encouraging to solar bulls that SunPower’s third quarter numbers, released Thursday, were strong. The $377.5 million revenue in the quarter was above analysts estimates of $350.4 million, and the 60 cents a share net profit was above the estimated 56 cents.

And while the company’s guidance for the current quarter is in line with the Street’s estimates, SunPower sees 2009 being a moderately strong year. It forecasts its revenue next year to be between $2.05 billion and $2.15 billion (versus the Street’s $2.06 billion) and earnings of at least $3.50 a share (versus the consensus $3.67 a share).

SunPower CEO Tom Werner said in a statement,

“Due to strong industry fundamentals, continued execution of our vertical integration strategy, expected gross margin expansion, and our progress on our cost reduction programs, we will materially meet our target operating model in the fourth quarter. We are strategically well positioned for 2009 and remain on track to realize our mission of reducing installed systems cost by 50% from 2006 to 2012.”

Werner also said SunPower is “fully funded” to reach its goals and sees no need to raise new funds, even though risk spreads on solar industry financing have increased.

While far from a blowout performance, SunPower’s ability to show growth this year and confidence in the future was welcome news. The stock rallied 25 percent to $50.99 on Thursday. But it’s not clear how much that rally means: It simply retraces the 25 percent decline the stock suffered in the previous two days.

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