It looks like Sunpower Corporation (NASDAQ:SPWR) could be ready to move into new markets, and as a result, Baird analysts have increased their multiple on the company’s stock. Their price target has now moved to $42 a share, and they have reiterated their Outperform rating on Sunpower in a report dated March 24, 2014.

Sunpower Corporation

Where Sunpower could go

Analysts Ben Kallo and Tyler Frank say they see opportunities for Sunpower Corporation (NASDAQ:SPWR) in numerous markets. Specifically, they think the solar power company is best positioned to enter Mexico, South America, some parts of Africa and also China. They say Sunpower’s partnership with Total is enabling it to expand its presence in international markets and that they expect the listed markets to “meaningfully contribute” to Sunpower’s business over the next one to three years.

They also see “an outside chance” that Sunpower will advance C7 projects in China through the joint venture.

Looking ahead for Sunpower

The Baird team doesn’t think Wall Street fully appreciates Sunpower Corporation (NASDAQ:SPWR)’s fa4 construction, which is still on track to cut costs by more than 35%. They think the facility will also match up with Sunpower’s introduction of solar panels which have higher efficiency. In addition, they expect to see margin expansion next year as a result of these cost cutting measures. They emphasize that this is one factor which they believe alleviates the “OLD ‘bear case,'” which stated that the solar modules produced by Sunpower are too expensive to produce.

The analysts also see “solid revenue” through next year because they expect demand to keep outpacing production. Sunpower Corporation (NASDAQ:SPWR) is still capacity constrained because demand for its high-efficiency modules has been quite high. They think the company will keep “efficiently” allocating its panels across different markets and classes of customers, which sets it up for success in the long term by diversifying revenue.

Why they expanded Sunpower’s multiple

Kallo and Frank said they expanded Sunpower Corporation (NASDAQ:SPWR)’s multiple because the company has continued to set itself apart from other solar companies. Their new $42 a share price target is based on a multiple of about 23 times their 2015 estimates. They expanded that from 22 times because the company has continued to expand into new markets, diversify customers, and build up its distribution network and global partnerships.