Deutsche Bank Upgrades SunPower (SPWRA) to Buy; Valuation and Industry Growth

November 5, 2009 7:12 AM EST

Deutsche Bank upgrades SunPower (Nasdaq: SPWRA) to Buy, price target increased from $28 to $31.

Deutsche analyst says, "We are upgrading SunPower to Buy based upon earnings power (valuation),
anticipated industry growth, and SunPower's market position. We were disappointed with the company's 3Q09 margin performance, and while we believe margin improvement can come as factory utilization climbs in 4Q09 and through 2010, we have chosen to model conservatively. With ~20% GM through 2011, we believe SunPower can earn ~$2.30 in 2011, and upgrade to Buy.

"The bearish argument on SunPower is that the company can hardly match the Chinese on module manufacturing cost/Wp. While there is a large measure of truth to this, winning in the Solar PV industry is more about the cost of energy delivered, and in this arena, SunPower can effectively compete. We believe the company’s products, systems business, and market strategy will enable the company to outgrow the market...We value the stock at $31 or ~15x our discounted, ongoing C2011E EPS of $2.30 (i.e. $2.04), toward the low-end of our valuation range for higher quality solar PV stocks."

To see more analyst ratings on SPWRA Click Here.

SunPower Corporation engages in the design, manufacture, and marketing of solar electric power technologies. The company operates in two segments, Components and Systems.

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