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