SunPower stock slides on third-quarter view
LOS ANGELES (Reuters) - SunPower Corp SPWR.O reported better-than-expected first-quarter earnings and raised its 2008 adjusted profit forecast on Thursday, but its shares fell sharply after the solar power company said revenue in the third quarter would be about even with the current period.
SunPower's shares fell about 5 percent in morning trade on the Nasdaq but were down as much as 15.5 percent after Chief Financial Officer Manny Hernandez on a conference call with analysts forecast flat revenue in the third quarter due to fewer big projects during that period.
Analysts called the sell-off an overreaction.
"A lot of it just has to do with the way projects come online, the timing of those," said Jefferies & Co analyst Paul Clegg, who has a "buy" rating on SunPower shares. "That's not really a great reason to be selling the stock today."
Solar stocks overall were also hurt by the introduction of a bill in the U.S. Senate that would extend key tax credits for renewables -- but only for one year, Clegg added.
SunPower and other solar companies have enjoyed rapid growth in recent years due to increased interest in sources of renewable energy and concerns about climate change. Earlier this year, however, many solar stocks took a beating due to concerns about a weakening U.S. economy.
SunPower's first-quarter net income was $12.8 million, or 15 cents per share, compared with $1.2 million, or 2 cents per share, a year earlier.
Excluding special charges, SunPower earned $39.1 million, or 39 cents per share. Analysts, on average, had been expecting 35 cents per share, according to Reuters Estimates.
Revenue rose 92 percent to $273.7 million.
DEMAND STILL STRONG
SunPower said strong demand for its solar panels prompted it to raise its full-year revenue forecast to between $1.3 billion and $1.375 billion, up from its January forecast of $1.2 billion to $1.3 billion.
It lifted its forecast for non-GAAP earnings to $2.10 to $2.20 per share from an earlier forecast of $2.00 to $2.10.
The company lowered its net income forecast for the year to between $1.10 and $1.20 per share due to a higher average tax rate. It had previously forecast net income of $1.17 per share to $1.27 per share.
In 2009, revenue is expected to rise 40 percent.
"Overall it's a very positive story," said Pierre Maccagno, an analyst with Needham & Co who has a "buy" rating on SunPower shares.
On the conference call, executives emphasized that the company would still see revenue growth in the second half of the year, even if the third quarter was flat.
"The demand continues to be very strong ... we expect to have a very strong finish to the year in the second half of 2008," said Howard Wenger, senior vice president of SunPower's global business units.
SunPower expects its polysilicon costs to be down 10 percent this year. Polysilicon is the key raw material used to make the photovoltaic solar cells and panels that transform sunlight into electricity.
The company also said that average selling prices for solar modules would be stable in the second quarter and drop in the low single digits in the second half of the year. They are projected to be down in the low double digits in 2009.
Solar module prices are expected to fall in the coming years as silicon becomes more readily available and demand for solar products increases.
Separately, Cypress Semiconductor Corp CY.N, which owns 56 percent of SunPower's common stock and 90 percent of its voting stock, said it had received a ruling from the U.S. Internal Revenue Service that could allow it to spin off the stake before November 2009.
SunPower shares fell $12.78, or 12.8 percent, to close at $86.80 on Nasdaq. The stock is down more than 33 percent so far this year, but has climbed 52 percent in the past month.
(Additional reporting by Matt Daily in New York)
(Editing by Dave Zimmerman, Phil Berlowitz)
