SunPower Guidance Takes Solar Stocks Lower (SPWR, FSLR, YGE, WFR, ESLR, LDK, JASO, CSIQ)

SunPower Corp. (NASDAQ: SPWR) is taking a hard hit to its stock price after the company reported earnings today, but it is the guidance rather than the earnings that is acting as the punisher.  SunPower posted Q4 2007 non-GAAP EPS of $0.39 on a 201% gain in revenues to $224.3 million.  First Call estimates were $0.37 EPS and $220.6 million in revenues.  SunPower reported non-GAAP gross margin for the fourth quarter 2007 of 25.3%.  Third-quarter 2007 revenue was significantly influenced by large scheduled project installations, particularly the Nellis Air Force Base project.

LOWER GUIDANCE is the issue here:

• Q1 2008 non-GAAP EPS target is $0.33 to $0.36 on revenues of $230 million to $250 million, yest First Call has $0.38 EPS and $250.2 million as consensus. Non-GAAP gross margin targets are 24% to 25%.
• 2008 non-GAAP EPS targets are $2.00 to $2.10 and total revenue is targeted at $1.2 billion to $1.3 Billion; yet First Call has $2.06 EPS and $1.24 Billion revenues as consensus.
• SunPower also targets 2009 total revenue to increase 40% to 50% from 2008 levels.

SunPower shares are trading down over 11% pre-market to $65.25 after closing at $74.25 yesterday.  While shares have been more than cut in half from highs of over $150 in November 2007, shares are still up roughly 100% from the 52-week lows.  This is taking down other key solar stocks this morning in pre-market trading:

• First Solar (FSLR) down 6% at 154.75 (52-week range $28.42 to $283.00).
• Yingli Green Energy Holding Co. Ltd. (YGE) down 1% at $22.45 (52-week range $10.48 to $41.50).
• MEMC Electronic Materials Inc. (WFR) down 4% at $67.01 (52-week range $43.11 to $96.08).
• Evergreen Solar (ESLR) down 1.2% at $11.18 (52-week range $7.36 to $18.85).
• LDK Solar (LDK) down 1.2% at $34.51 (52-week range $22.27 to $76.75).
• JA Solar (JASO) down 4.8% to $57.00 (52-week range $16.17 to $76.50).
• Canadian Solar (CSIQ) down 4.7% to $16.70 (52-week range $6.50 to $31.44).

Tom Werner, SunPower’s CEO, makes comments about the overall sector: "….In the latter part of 2008 and beyond, we expect our industry’s silicon feedstock to become more abundant, leading to lower solar panel prices which will redistribute the power and profit pools in the value chain…. We are making steady progress on our plan to reduce installed system costs by 50 percent from 2006 levels by year- end 2012….. our silicon suppliers have met major milestones that lay the foundation for our expansion by substantially increasing our silicon supply in 2008….. "

Jon C. Ogg
January 24, 2008