The solar energy company Sunedison Inc (NYSE:SUNE) and online media giant Yahoo! Inc. (NASDAQ:YHOO) have been two of the most popular stocks among sell-side research firms on Wednesday. Here’s what RBC Capital analysts have to say about Sunedison’s merger agreement to acquire Vivint Solar, and Yahoo’s decision to discontinue its efforts to spin-off its stake in Alibaba.
Sunedison shares surged 16.74% to $4.03 following the news that SunEdison and Vivint Solar have reached an agreement to modify the terms of the merger agreement announced on July. 20, reducing the cash component, but increasing the level of stock.
RBC Capital analyst Mahesh Sanganeria commented, “Based on SUNE closing price of $3.45/share as of Dec 8, 2015, we estimate the new offer is approximately $12.35 for each VSLR share, representing about $4.15/share savings from the original offer of ~$16.50/share.”
“In addition to the change of acquisition price, SunEdison also allows Vivint Solar to elect to an all cash payment to VSLR stockholders, other than 313 Acquisition (a vehicle controlled by private equity funds managed by Blackstone), with the consent of 313 Acquisition. Should such option is exercised, 313 Acquisition would receive additional consideration of all SUNE common stock and convertible notes instead of cash for the amount of additional cash paid to public stockholders. Also, 313 Acquisition entered into a commitment to provide a $250M credit facility to fund the ongoing growth of SunEdison,” the analyst continued.
Sanganeria reiterated an Outperform rating on the stock, with a price target of $36, which implies huge upside of 794% from current levels.
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Mahesh Sanganeria has a yearly average return of -1.4% and a 50.0% success rate. Sanganeria has a -13.5% average return when recommending SUNE, and is ranked #2678 out of 3640 analysts.
Out of the 16 analysts polled by TipRanks in the last 6 months, 11 rate SunEdison stock a Buy, 3 rate the stock a Hold and 2 recommend a Sell. With a return potential of 275%, the stock’s consensus target price stands at $15.10.
In addition, RBC Capital’s Mark Mahaney reiterated a Hold rating on shares of Yahoo, with a price target of $42, after the company decided to discontinue its efforts to spin-off its stake in Alibaba due to concerns on the ultimate tax treatment.
Mahaney commented, “We view this latest development from Yahoo! as unsurprising, especially given the uncertainty around a potentially very large tax liability that would have existed had the spin gone ahead, and recent pressure from activist shareholders. Our thoughts on Yahoo!’s core business remains unchanged, though we continue to believe that strategic value remains in the core business. We view this development neutrally, in part because it delays the timing of any potential separation of YHOO’s core from the BABA stake by potentially a year or more.”
According to TipRanks.com, Mark Mahaney has a yearly average return of 24.3% and a 67.8% success rate. Mahaney has a 2.7% average return when recommending YHOO, and is ranked #3 out of 3640 analysts.
Out of the 38 analysts polled by TipRanks, 20 rate Yahoo! stock a Buy, while 18 rate the stock a Hold. With a return potential of 32%, the stock’s consensus target price stands at $44.32.