Analyst Actions: SolarCity Upgraded To Outperform, Target Almost Doubled at Credit Suisse; Shares Up 5%

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Credit Suisse says: "UPGRADING to OUTPERFORM (from Neutral); Raising Ests & TP to $52 (from $28); An Improved Outlook on Net-Metering Risk

Upgrading to Outperform (from Neutral); TP Increase to $52 (from $28). "We are upgrading SCTY after our discussions with the California Public Utilities Commission (CPUC), the announcement of an aggregation vehicle of $100-150mm at a relatively low cost of financing, and solid execution driving lower installation costs. While we expect multiple view points on the topic, we are more comfortable that the CPUC and California governor will continue to support distributed solar generation even if the net metering cap is not raised by 2015.

"SCTY's stock price has declined 36% since its peak on May 20th, removing some of the concerns over valuation and the overhang of the lock-up expiration on June 11th. Our fundamental views drive our valuations - we believe the higher float may also expand the investor base by providing higher liquidity for the stock. We are revising our 2014 EPS from ($1.73) to ($0.58). We are also raising our 2015 EPS estimates to $1.01 from ($1.67)."

Estimates and Valuation. "Lower operating and financing costs, and possible alternatives to net metering such as feed in tariff like compensation for excess production lead us to be more optimistic on SCTY growth rates and retained value. We have reduced our installation cost estimate from $2.50/Watt to $2.25/Watt due to management commentary that rail-free installations implemented by 3Q13 would be a step-function decline in costs. We are increasing our 2016-2020 MW growth rate from 3% per year to 10% and slowing the decline in the retained value per Watt from 20% per year to 15% in 2016-2020 due to increased comfort on longer term net metering risk."



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

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This article appears in: Investing , Commodities

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