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Analyst Actions: SolarCity Downgraded To Neutral, PT Raised $6 at Credit Suisse; Shares Fall 3%

Posted
5/14/2013 12:20:00 PM
By: MT Newswires
Referenced Stocks:SCTY

SolarCity Corp. ( SCTY ) has been downgraded by analysts at Credit Suisse to a Neutral rating from Outperform. Despite the downgrade, the firm has raised its price target on the stock to $28 from $22 a share.

"While we continue to believe SolarCity has good long-term prospects, and we expect the limited float could sustain near-term performance, we think it is prudent to take some profits at these levels ahead of the lock-up expiration on June 11," said Credit Suisse. "We estimate that nearly half the actively traded float of SCTY is short - a short squeeze may have contributed to SCTY's stock appreciation of over 300% since the IPO in December 2012 and 200% YTD. The lock-up would increase the tradable float by 8-10 times, which could ease the short squeeze and place downward pressure on the stock from current levels. We are revising our 2013 EPS from ($0.84) to ($1.54) and 2014 from ($0.90) to ($1.73) due to model revisions."

Valuation

"Our PT methodology continues to be based a DCF of expected installations and value creation. We are now using a WACC of 15%, revised lower from 20%, to reflect a growing execution track record, and therefore bumping up our PT from $22 to $28."

Shares of SCTY are down almost 3% to $34.82 in mid-day trade, but are still in the high end of their 52-week range of $9.20 - $39.