Auriga Maintains Sell Rating On SunPower

According to Auriga, SunPower Corp SPWRA Sell rating is maintained. Auriga said that, while it recognizes the Total TOT tender offer puts a bid under the stock, it still maintains the Sell-rating and $13 target for shares of SunPower. “We cannot recommend investors short the stock at this time given the mechanics associated with the tender offer, but we do suggest existing holders of SPWRA and SPWRB tender their shares and/or consider selling June or July calls against any shares at these levels given risk of the deal possibly not completing. In short, SPWRA's 1Q11 report was the worst we have heard so far this reporting season and, unlike some peers, we do not see it improving anytime soon even with the resumption of activities in Italy. The company went from a mild net cash position to a substantial net debt position, inventory days tripled to a level exceeded only by 1Q09, and DSOs went to its highest level ever. With comparable module costs (not “efficiency adjusted”) in 1Q11 on par with wholesale selling prices of Asian peers, it seems only a matter of time before SPWRA's own manufacturing goals are rendered mute as a result of Asian competition and poor European policy enactment. In short, this is not the company of a few years ago and investors looking for exposure to the solar space are encouraged to look elsewhere. Our $13 target is 1x our 4Q12 book value estimate.” SunPower Corp closed yesterday at $21.38.