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SunPower Keeps Full-Year View Despite $400 Million Q2 Guidance Lag

Late Thursday, SunPower ( SPWR ) kept its full-year outlook despite offering Q2 guidance that lagged Wall Street’s view by $400 million, indicating a back-end-loaded 2016 for the No. 2 solar developer, says Credit Suisse analyst Patrick Jobin. SunPower and First Solar ( FSLR ) stocks were both flat in early afternoon trading on the stock market today , but IBD’s 26-company Energy-Solar industry group was down more than 1%, touching a three-year low for the third straight day. SunPower-First Solar yieldco 8point3 Energy Partners ( CAFD ) stock was down 2%. For Q1, SunPower reported $433.6 million in sales ex items, topping analysts’ model for $328.5 million, boosted by revenue recognized from the sale to 8point3 of the 50-megawatt Hooper Project. Solar firms form yieldcos to own their operating assets. But SunPower’s 30-cent loss per share ex items was wider than the 20-cent projection of 16 analysts polled by Thomson Reuters, and that swung from a 13-cent gain in the year-earlier quarter. SunPower said it deployed 236 megawatts in the quarter, above guidance for 180 MW to 210 MW and up 8% year over year. Of that, Jobin estimates 75 MW was residential, 35 MW commercial and 205 MW power plant. The latter two segments missed views for 43 MW and 210 MW. Residential deployments fell 23% on Japanese weakness, partially offset by 50% growth in the U.S. market, Jobin wrote. But lease bookings (37% of U.S. deployments) fell 18%. For the current quarter, SunPower guided to $310 million to $360 million in sales, down 11% year over year at the midpoint. That was far off the analysts’ model for $722 million. SunPower didn’t offer an earnings view, but the consensus expected 22% growth to 22 cents. During Q2, SunPower expects to deploy 360 MW to 385 MW. For the year, the company maintained its view for 1.6 gigawatts to 1.9 GW and $3.2 billion to $3.4 billion in sales “implying a second-half weighted year,” Jobin wrote. SunPower also shed light on 650 MW in projects. The lion’s share, 436 MW, will be completed in Q4. The project list includes 241 MW slated for sale to 8point3, 151 MW for third parties and 255 MW to be divvied up. The company also announced a $200 million revolver facility to focus on commercial and small-scale utility projects that will be able to fund up to 100% of construction projects. Jobin retained his outperform rating and 32 price target on SunPower stock, which was near 17 Friday afternoon.

First Solar Q1 Sales Expected To Double; 2017 Could Mark EPS Trough

Wall Street’s call for No. 1 solar installer  First Solar ( FSLR ) to exceed $3.50 in 2017 earnings might be “too high,” but that year also could mark a trough for the company’s profit, Deutsche Bank analyst Vishal Shah said Tuesday. Shah reiterated his buy rating — while also cutting his price target to 80 from 86 — on First Solar stock ahead of the company’s Q1 earnings report, due out after the close Wednesday. First Solar’s annual earnings are expected to dip 20% to $4.30 in 2016 and by another 18% to $3.53 in 2017, according to the consensus of 21 analysts polled by Thomson Reuters. But Shah sees the company returning to earnings growth in 2018. “We believe First Solar should be in a position to achieve $4.35-$5 (earnings per share) in 2020 in a base case scenario, or as high as $7.30-$8.50 in 2020 in a bull case scenario,” he wrote in a research report. The company’s EPS jumped 37% in 2015 to $5.37. For Q1, the consensus expects First Solar to report $958.3 million in sales, more than doubling year over year, and 90 cents EPS, swinging from a per-share loss of 60 cents in the year-earlier quarter. Both metrics are seen dipping in Q2. But Shah calls First Solar “a relative safe haven in the cleantech sector,” citing a strong balance sheet and robust near-term outlook. For 2016, First Solar’s earlier guidance called for 8% year-over-year sales growth. The company has a 3-gigawatt backlog for 2017-2020 comprised of 2 GW in system sales and 1 GW in module sales. Recent bookings have shifted in conjunction with First Solar’s earlier guidance for 80% modules and 20% systems in incremental bookings. Shah expects First Solar to book 2 GW-3.5 GW in system business for 2017-2020, while shipping 17 GW of modules into internal systems/third module customers. In early afternoon trading on the stock market today , First Solar stock was up 1%, near 61. Shares are down 8% this year but have fared better than IBD’s 20-company Energy-Solar industry group, which is down 27%. First Solar tops the group in terms of market value, with residential installer SolarCity ( SCTY ) and rival solar developer SunPower ( SPWR ) trailing distantly. Together, First Solar and SunPower sponsor yieldco 8point3 Energy Partners ( CAFD ), fourth in market value.

First Solar, SunPower To Withstand SunEdison Inferno: Guggenheim

First Solar ( FSLR ) and SunPower ( SPWR ) stocks flashed Wednesday after a Guggenheim analyst said rival  SunEdison ‘s ( SUNE ) “collapse” wouldn’t torch the duo and their yieldco 8point3 Energy Partners ( CAFD ). Just ahead of the closing bell on the stock market today , SunPower stock was up about 3%, leading First Solar stock which was up about 2%. Shares of 8point3 Energy Partners trailed, up 0.5%, ahead of beleaguered SunEdison stock, down about 7% and trading below 40 cents. Broadly, solar stocks lit up Wednesday. IBD’s 21-company Energy-Solar industry group was up 2% in late-afternoon trading. SunEdison stock has plunged 99% since its 2015 high on July 20, when it announced its plan to acquire Vivint Solar. Residential installer Vivint Solar scrapped the sale in December, citing SunEd’s lagging financials. Last month, SunEdison’s yieldco TerraForm Global ( GLBL ) distanced itself from massive project developer SunEd, which could be headed for a bankruptcy protection filing soon , according to reports. SunEdison may be in technical default on $725 million in second-tier loans unless it negotiated extensions with creditors. ITC Extension A Boon But First Solar and SunPower won’t feel that heat, Guggenheim analyst Sophie Karp wrote in a research report. Karp initiated coverage on First Solar stock with a buy rating, ahead of SunPower and 8point3 Energy Partners stocks, which have neutral ratings. Congress’ extension to the key Investment Tax Credit (ITC), which underpins the U.S. solar industry, will prove a boon for large-scale developers like First Solar and SunPower, she wrote. Residential installers like SolarCity ( SCTY ) and Sunrun ( RUN ) won’t see the same benefits. “We do not think that residential developers will be main beneficiaries due to the fiercely competitive nature of their business,” she wrote. “Despite operating in a fragmented and competitive market (large-scale developers) are still much better protected and will be able to retain more benefits.” But SunPower might be too internationally stretched to reap the ITC extension benefits as fully as First Solar, Karp wrote. Prepping for the expected expiration Dec. 31, 2016, SunPower invested heavily in international expansion. “Given that the ITC extension has changed the calculus domestically, we wonder if SunPower is now too thinly stretched to take advantage of this backdrop,” Karp wrote. Her price target on SunPower stock is a 21. She lists First Solar stock with a 77 price target. SunEdison’s collapse will likely lead First Solar and SunPower to bring their financing back to basics, Karp wrote. Project financing will be available to reputable players at attractive rates, but yieldcos will likely continue to be shut out of the market. Meanwhile, tech innovations are driving solar costs down and storage is on the horizon, Karp wrote. Storage is often seen as a pie-in-the-sky innovation to cut solar customers’ reliance on utilities at night and on cloudy days.