SunPower Corporation (SPWR) has extended its long-standing supply agreement with Toshiba through 2018. Pursuant to the supply agreement, SunPower would provide over 100 megawatts of its highest efficiency residential solar panels annually exclusively to Toshiba. Toshiba would offer solar systems with SunPower's highest efficiency solar modules in the rapidly growing Japanese residential market. Since the company first teamed up with Toshiba in 2010, it has delivered more than 150 MW of its high-performance solar panels.
Toshiba Corporation is a Japanese multinational electronics, electrical equipment and information technology corporation headquartered in Tokyo, Japan.
SunPower is a vertically integrated solar company with presence across the entire solar value chain. The company designs, develops, manufactures, markets and sells high-performance solar electric power technology products, systems and services worldwide for residential, commercial and utility-scale power plant customers. The company’s semiconductor-based solar cells and solar panels, which convert sunlight into electricity, are manufactured using proprietary processes and technologies. SunPower is largely owned by French oil major Total S.A. (TOT).
SunPower’s customer base is spread across North America, Europe, the Middle East, Asia and Australia. The company is proactive in entering new markets. In addition to a sizeable presence in the US, it is already focusing on improving market share in France, Germany, Italy, Spain and Japan, while gaining new market share in emerging markets like England, Greece, Israel and Malta. SunPower is also increasing its global market presence within the residential and commercial markets by expanding its network of dealers. Finally, by steering clear of long-term contracts for sales through its dealer network, the company is geared for margin growth on the back of any short-term upswing in the solar market.
SunPower is however witnessing falling Average Selling Prices and margins in its residential and small commercial markets segment which accounts for approximately two-thirds of its top line. We expect the trend to continue unabated in the near future with valuation further restrained by the higher cost structure of the company compared to its peers. Other risks include subsidy roll-back in Europe and foreign exchange risk.
SunPower presently retains a short-term Zacks #2 Rank (Buy). Over the longer run we maintain our long-term Neutral recommendation on the stock.
SunPower mainly competes with Suntech Power Holdings Co. Ltd. (STP) and First Solar, Inc. (FSLR).
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