SunPower Corporation (NASDAQ:SPWR) shares have declined more than 23% in the last three months. However, the company is quite upbeat about its long-term growth opportunities. At its analyst day event, the solar systems manufacturer issued lower-than-expected guidance for FY2015. The company guided 2015 EPS between $1.10 and $1.50 on revenue between $2.4 billion and $2.6 billion. That was lower than the consensus estimate of $1.67 in earnings per share and $2.8 billion in revenue.
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SunPower’s 2015 guidance not as bad as some believe
However, JPMorgan analysts Paul Coster and Mark Strouse said in a research note that the company’s guidance was below expectations because of its decision to hold back more MWs for its new HoldCo/YieldCo structure. SunPower’s guidance assumes that 300-400MW is added to its HoldCo, bringing down the EPS estimate by 20-25 cents. Excluding this, the guidance was in-line with the Street expectations. JPMorgan upped its price target from $39 to $40, and reiterated its Overweight rating on the stock.
The San Jose-based company is targeting 25% annual EBITDA growth rate, reaching $900 million by FY2019. SunPower told analysts that EBITDA growth will be driven primarily by distributed generation. Distributed generation (DG) is entering a mass adoption phase. SunPower is expected to reach one million cumulative customers in 2018.
SunPower expects its distributed generation revenue to grow from about $1.25 billion in FY2015 to $2.75 billion by FY2019. It forecasts residential DG to grow at 50% and commercial DG at an impressive 57%. What’s more, the company expects MW deployment to almost double from 700MW in 2015 to 1350MW in 2019. The company expects solar costs to decline 30% and customer acquisition costs to come down by 20%-50%. Integration of SolarBridge’s microinverters should help reduce costs.
SunPower to triple its capacity
SunPower plans to triple its capacity by 2019. Fab 4 will start producing silicon next year and Fab 5 is expected to start production in the second-half of 2017. They will add 800MW capacity with an exceptional cell efficiency of 25%. The company will also be adding new LCPV capacity in 2015-16 to meet the demand in China. The company has over 10GW of power plants in the pipeline, which includes about 325 projects in 25 countries.
SunPower shares inched up 0.35% to $28.43 at 10:32 AM EST on Wednesday.
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