AmTech Reiterates $164 Price Target on SunPower (SPWR)

American Technology Research reiterates its Buy rating and $164 price target on SunPower (Nasdaq: SPWR) following this morning's announcement from PG&E (NYSE: PCG) of an 800MW deal in California. Shares of SunPower are currently up 17% to $92.18.

The firm cites several "points of reference" which put into perspective the magnitude of the deal:

• 800MW is ~30% of the total worldwide installations in 2007
  
• 800MW is 3.6x the total amount of PV installed in the US in 2007
  
• 800MW is ~80% of the installations expected to be completed in Spain in 2008, which has been the cause of much multiple compression, and
  
• as SunPower's contribution to the deal is 250MW of solar power, this is about 70% of the total installations the company has done in its history.

AmTech estimates that the contract could add as much as $1.5 billion to SunPower's total revenues over the course of the deal, equating to about $2.62 per share based on 20% EBIT margins and a 25% tax rate. The firm currently sees SunPower reporting FY09 EPS of $4.11, and believes that the Street estimate of $3.63 will move towards its number over time.

Additionally, AmTech predicts that "At current run rates SPWR could install 250MW in 2.4 years using only 2 full time crews. It would take 5 crews to accomplish the installation in one year."

Despite today's double-digit percentage surge, AmTech's price target on SunPower still represents a potential gain of more than 75% from current levels.

SunPower Corporation engages in the design, manufacture, and marketing of solar electric power technologies.

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