SunPower Shines Again

May 1, 2012
J. Webster
Comments Off on SunPower Shines Again

Why are shares of SunPower shooting higher like a flower trying to reach the sunlight? It’s all thanks to Citigroup analyst Timothy Arcuri. Mr. Arcuri upgraded SunPower from a hold to a buy, and stated the entire solar sector might be near a bottom.

The gist of his call is that even with the European economy struggling, and countries cutting subsides, solar stocks can rebound with the help of demand from countries like China, Inida, and Japan. Interesting. Oh yeah, there’s also always a lot of short interest in SunPower, so they’re getting the squeeze today – that’s why you’re seeing a nearly 17% pop in SPWR. There’s a short float of 7.60%, which is 2,970,000 shares short the stock according to Yahoo Finance.

“Our field work indicates product sell-through – particularly in Europe – has increased significantly in the past 1-2 weeks and utilization rates at Tier 1/2 cell/module producers have begun to spike higher,” Arcuri writes in a research note. “This indicates a clearing of inventory and suggests Q2 should ultimately represent a cyclical bottom in margins at cell/module producers. This is being driven in part by pull-ins ahead of mid-year feed-in tariff cuts in 6 European countries; typically, this might result in a falloff in demand for Q3 but this time we see other markets with demand elasticity that can more than offset any Q3 European softness. These include China, India, US, Japan (new FiT in July is among the highest in the world) and many other smaller countries where free market economics, rather than FiTs, are driving demand elasticity.” (Forbes)

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