SunPower (SPWRA) is a manufacturer and distributor of silicon-based solar cells. It produces solar power products for installation on residential and commercial units. SunPower primarily competes with companies like FirstSolar (NASDAQ:FSLR), SuntechPower (NYSE:STP), and Yingli Green Energy Holding (NYSE:YGE).
The firm's sales of utility and power plant solar components, such as solar panels and inverters, has grown consistently over the past few years – from 25 megawatts (NYSE:MW) in 2007 to 132 MW in 2010, led by several benefits and government subsidies promoting solar energy adoption. First Solar also benefits from an expanding dealer network.
We forecast that sales will continue their growth pace in the coming years, due to declining prices of solar systems and high efficiency of SunPower's solar systems compared to competitors.
While we anticipate SunPower's sales of utility and power plant components will rise to 614 MW by the end of our forecast period, Trefis members' predict a slightly higher rise towards 634 MW, suggesting a slight upside to our price estimate for SunPower stock.
(Chart created by using Trefis' app)
We currently have a $14.85 price estimate for SunPower's stock, roughly 10% below market price.
Declining Prices of Solar Systems
As polysilicon and material costs decline and Sunpower moves to a regional manufacturing strategy, production costs should fall. Installation costs represent 50% or more of total costs of a solar system today.
A strong value proposition, market leadership, bankable status and brand image have also translated into lower financing costs for SunPower, as banks and financiers view the company as having significantly lower risk versus other players. Government subsidies would further cut down prices of solar panels for consumers.
High Efficiency of SunPower Solar Systems
SunPower makes solar panels that have the highest PTC/sqft values in the industry. This stands for watts per square foot that each panel produces under realistic testing conditions. SunPower's 230W and 225W monocrystalline modules take the first two spots, with PTC/sqft values of 15.5 and 15.1. Its closest competitor is Sanyo, which has a PTC/sqft value of 14.5. SunPower's ability to maximize power generation per square foot will increase the attractiveness of its panels over those of competitors. This is especially true in residential settings where productive roof space can be a premium.
Trefis Community Forecast
Trefis members forecast that SunPower's utility and power plant components shipments will increase from 132 MW in 2010 to 634 MW by the end of our forecast period, compared to the baseline Trefis estimate of an increase to 614 MW during the same period. The member estimates imply a slight upside to our $14.85 price estimate for SunPower's stock.