Sunpower Corporation Cover Recommendation

SPWR - Sunpower Corporation (Nasdaq) - (Closing Price - $69.21)

Sunpower Corporation (SPWR) announced their fourth quarter 2007 earnings today and reported disappointing results.

Sunpower reported revenue of 224.3 million and GAAP earnings of 0.06 per share. Revenue and EPS were both down from the prior quarter’s results of revenue of 234.3 million and EPS of 0.10 per share. Sunpower gave mediocre guidance of revenue between 230 and 250 million and GAAP EPS of 0.13 – 0.16 for next quarter. The company also raised full year guidance for 2008 EPS between 1.17 and 1.27 per share.

The share price of Sunpower was down over five dollars today but finished well above its intraday low of $60.25. In my opinion Sunpower is still way overvalued but I am going to recommend to cover.

If you followed my initial recommendation to short Sunpower at $126.12 you are sitting on a 45% gain in less than three weeks. I think most of the dramatic selloff is probably over and the share price of Sunpower is in the process of finding support.

The entire solar power sector is off since my recommendation to short solar stocks and you could of made a big gain shorting any of them. This is in contrast to the analysts that continued to pump these stocks even at ridiculous valuations. Most of these companies still have very high valuations, heavy insider selling, and major dilution yet analysts are still pumping these stocks. This is a good example of why you shouldn’t put much stock in what analysts say and you should do your own research.

Disclaimer: I have no position in SPWR.

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