Monday, January 14, 2013
Warren Buffet Aside - Putting A Chill in SunPower
Going forward, SunPower (SPWR-$8.19) hopes to replicate the success of its Antelope Valley project with contract wins for utility-scale projects in new markets, from Australia to the Middle East and Asia, in particular Japan and mainland China. To date, however, its global footprint is nondescript: In the first nine months of 2012, North America and Europe accounted for 68% and 23% of total sales.
Should global market conditions re-balance in second-half 2013, the company still faces the same old headwinds: the presence of cheaper Chinese competitors, like Yingli Green Energy (YGE), and customers highly dependent on public subsidies, whether the nomenclature be tax credits or the once-popular feed-in tariffs. Christopher Blansett, an analyst at JPMorgan Chase (JPM), articulated it best: “SunPower is living off of borrowed time. Eventually, revenue from [these] large projects will end, and new sales will probably be at lower prices.”
Continue Reading at YCharts: SunPower: Stock Rises 50% on Berkshire Deal: Why That’s An Exit OpportunityEditor David J Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.