The leading supplier of fiber optic components and modules used in advanced high-speed communications networks, JDS Uniphase Corporation (JDSU) is trying to get a foothold as a chip supplier in the concentrated photovoltaic (CPV) market.
CPV cells technology is considerably expensive and is designed to capture concentrated sunlight within solar panels for electrical power generation. However, according to various industry researches, the CPV market size may go beyond $3 billion by 2015 and the concentrated solar power may account for 25% of the global energy requirements by 2050.
The CPV market is currently being driven by use in power plants at college campuses, shopping centers and industrial buildings that generate power in the 500 kilowatts (KW) to 10 megawatts (MW) range as compared with residential roof-top housing market installations that use about 5 kw per home.
Due to the huge costs associated with this technology, there are few players. The entry of large players such as JDS Uniphase will be beneficial in slashing costs. The company intends to work with leading solar system integrators that will use its CPV cells in solar modules installed at power generation facilities worldwide.
Previously, Cogentrix Energy LLC announced plans to build a 30 MW power plant in Colorado, using concentrator PV panels made by Amonix. CPV Company Solaria also recently signed a five-year supply agreement with enXco.
We believe JDS Uniphase is gradually accelerating its top-line growth driven by a significant contribution from its optical networking equipment, coupled with the recent acquisition of network solutions products of Agilent.
We are optimistic about the success of the company’s product portfolio targeting next-generation technologies of IPTV, wireless backhaul, LTE networks and 40 Gbps and 100 Gbps optical network systems and the entry into the CPV market. JDS Uniphase is very much focused on cutting costs and preserving cash. An improving global economy will also help the company to sustain growth.
JDS Uniphase faces stiff competition from Avago Technologies Limited (AVGO) and Finisar Corp. (FNSR).
We thus maintain our long-term Outperform recommendation for JDS Uniphase. Currently, it is a Zacks #2 Rank (Buy) stock.