(Sunpower article updated from March 22 with additional analyst commentary and news related to Sunpower, solar stock fundamentals and solar stock movements.)

SAN JOSE, Calif. ( TheStreet) -- These days, it ain't easy being a U.S. solar company.

Whether it's SunPower ( SPWRA), First Solar ( FSLR), Evergreen Solar ( ESLR) or Energy Conversion Devices ( ENER), positive sentiment about the U.S. solar stocks is hard to find lately.

The latest batch of bad news for U.S. solar stocks came courtesy of SunPower's fourth quarter earnings -- delivered after the market close last Thursday -- and a Wall Street Journal report over the weekend that argued the 40% decline in First Solar's share price over the past two years may be a negative trend still off from its trough point.

Pointedly negative was the market's response to SunPower's fourth quarter earnings. The backward-looking numbers were less of an issue than SunPower's weak 2010 guidance -- a breakeven quarter in Q1, and a full-year outlook of earnings per share in the range of 5 cents to 35 cents, well below Street estimates. The Street estimate for SunPower's first quarter alone was 17 cents.

Granted, consolidated gross margin deterioration detailed in the SunPower fourth quarter earnings report -- as its systems business assumes a higher profile and margins on module sales continues to decline -- were far from ringing endorsements of SunPower stock.

Investors sent SunPower shares to a 15% decline last Friday, and that decline continued on Monday, with SunPower shares down another 4%, to $18.21. It was another busy day in trading of SunPower shares, with almost twice its average daily volume of 2.5 million shares traded on Monday.

SunPower shares have since stabilized, closing between $18 and $19 through the past four trading days through Wednesday.

First Solar also received two votes of confidence on Thursday morning, with analysts at Morgan Stanley and Kaufman Brothers initiating coverage of the U.S. solar bellwether at a buy. Kaufman provided a $140 price target for First Solar shares, while Morgan upped the ante, targeting First Solar shares at $150. First Solar shares rose on the bullish calls by more than 3% on Thursday morning, reaching near the $113 mark in early trading.

On Thursday morning, SunPower announced a $200 million senior cash convertible note deal to close on April 1, with proceeds intended to replenish its cash reserves. In its acquisition of SunRay Renewable Energy, announced in February, SunPower paid a majority of the $277 million purchase price in cash . SunPower had indicated in its recent earnings conference call that tapping the debt capital markets was a likely upcoming event. For solar, the SunPower debt deal marks the second capital markets raise so far in 2010, following shortly after Trina Solar's ( TSL) secondary equity offering last week of 9 million shares, which raised more than $175 million.

SunPower shares have closed higher over the past two trading days after hitting a closing price low of $18.21 on Monday. SunPower's 52-week low was actually hit a few weeks before its earnings -- a share price of $17.82 on Feb 25. While SunPower shares took a big hit when the company first announced an audit investigation back in mid-November 2009, SunPower shares hadn't closed below the $20 mark in the past 52-week period, until February of this year.

On Thursday in the pre-market, SunPower shares were up by more than 2% after the convertible deal was announced.

Investors and analysts can make the argument that an inflection point in SunPower's corporate evolution has been reached , and it reflects a larger inflection point for the U.S. solar industry. Each U.S. solar firm has reached its own inflection point at its own time and in its own way, but an inflection point has been reached in every case.

In May 2008, First Solar's shares were over $310; on Monday, they were worth $200 less than that May 2008 share level.

When First Solar's shares reached a zenith in May 2008, Energy Conversion Devices shares shortly followed First Solar's lead and reached the $80 mark during the summer of 2008. Energy Conversion Devices' shares closed at $7.62 on Monday.

It's not just the steady slide in First Solar's share price that evokes the echoes of an irrationally exuberant dot.com-esque one-time support for solar. In December 2007, SunPower shares were at $130. At the same time, Evergreen Solar shares were above $17. Evergreen shares closed at $1.22 on Monday.

Still, the plus-$300 share price level for First Solar may be indicative of an erroneous early history for solar stocks, with the greedy dot.coms assigned to a stock that should have never had that profile in the first place.

Were solar investors sold a flawed bill of goods, or was the rapid rise and steady decline in U.S. solar shares as much a fault of investor cognitive dissonance -- i.e. don't ask questions when things look good.

Anyway, it's all water under the "Brooklyn Bridge" that solar investors were "sold" back in the sector's heyday.

Analysts will continue to debate the proper share price for SunPower. Both Piper Jaffray and Barclays Capital continue to believe that SunPower deserves a share price above $20 -- Piper even raised its price target from $22 to $25 after the fourth quarter earnings report and 2010 guidance, arguing that short-term share price pain would only be a precursor to a subsequent SunPower rally.

If that rally in SunPower shares is going to occur, though, what is going to trigger it?

Let's assume for the sake of argument that investors are willing to accept that SunPower and First Solar don't deserve to be considered high-tech companies, or assigned technology multiples. Are solar's most vocal backers willing to stick with solar as a lower margin, energy product and construction business? Notably, Piper Jaffray referred to First Solar as an "energy products" company in its post-fourth quarter earnings research note on the bellwether U.S. solar stock.

The range of responses to the SunPower 2010 outlook ran the gamut, from Piper Jaffray and Barclays' continued support of SunPower shares, to the "sitting on the sidelines" view of securities firms like Oppenheimer & Co., and a downgrade to sell from Wedbush Securities. Citigroup, already at a sell on SunPower, reduced its price target from $18 to $15. Wedbush is at a $15 price target after its bearish turn on SunPower stock also.

FBR Capital Markets referred to the SunPower earnings and 2010 outlook as the "final margins capitulation" from the U.S. solar company. Interestingly, FBR analyst Mehdi Hosseini looked on the margin deterioration in the SunPower business as an incremental positive, in as much as it presents a new, more sober reality. Investors and the Street can reset the bar from which to benchmark SunPower.

So is SunPower a plus-$20 stock? Is it a $15 stock? Has it settled into its fair value between $15 and $20?

If the bar on SunPower and the U.S. solar sector has been reset, does that bar your future investment in the U.S. solar stocks, or bring you to share the conclusion of Barclays, that SunPower will ultimately reach a share price of $28?

The Citi analyst argues that SunPower's $20 multiple was "unjustified given that gross margins for the Chinese players are as good or better than SunPower -- and likely to remain so for the foreseeable future."

What do you believe the foreseeable future has in store for SunPower's share price? Take the poll below to see the consensus of TheStreet -- and don't hesitate to leave a comment below. As if solar investors would ever hesitate to leave a comment.

What do you believe the end of 2010 has in store for SunPower's share price?

SunPower shares will be at or above $25 by 2011.
SunPower shares will trade between $20 and $25 by year's end.
SunPower is not likely to trade above $20, but it's still a good energy investment.
It's all downhill from here for SunPower; I'm betting on the Chinese solar companies.

-- Reported by Eric Rosenbaum in New York.


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