3/19/2010-Citigroup maintained its Sell Rating on SunPower (NASDAQ:SPWRA) and lowered its price target to $15 from $18.
Analyst Timothy M Arcuri said, "While completion of the actg investigation removes overhang, SPWR increasingly reliant on systems business for profits (module margins look headed to 15-20% at best) esp. w/ the recent SunRay acq. Since systems carry a much lower multiple (~0.3x sales on European comps) and backing this out of SPWR's valuation on 2011 revs, we est its module business trades at ~1.6 1.7x 2011 module revs. This is a significant prem to Chinese vendors trading largely at or below 1.0x 2011 revs. While SPWRA continues to get an efficiency and "based in US" premium, this seems unjustified given that gross margins for the Chinese players are as good or better than SPWR - and likely to remain so for the foreseeable future. Maintain Sell (3S), cut target to $15 on 15x 2011 GAAP EPS."
The bank expects the company to report 2010 EPS of $1.16, versus consensus estimates of $1.78.
Keywords: SunPower citirgoup rating price target estimates
Ticker(s): SPWRA
