SolarCity Corp (NASDAQ:SCTY) announced that it has completed its first cash equity transaction with partner John Hancock Financial. John Hancock is investing $227 million in a diversified portfolio of residential, commercial and industrial solar power projects that collectively represent 201 megawatts of generation capacity.
SolarCity monetizes the majority of 20-years of underlying cash flows—including solar renewable energy credits (SRECs) associated with the projects—and retains ownership of the assets and continues to service the customers. SolarCity retains a minority share of annual cash flows throughout the contract term as well as 99% of post-contract cash flows. The transaction raised $3.00 of financing per watt of solar generation capacity for SolarCity including tax equity investments, upfront rebates and prepayments; a blend of $3.24/watt for residential projects and $2.35/watt for commercial projects.
“We’re proud to partner with John Hancock, one of the most trusted brands in insurance and financial services, on this 20-year investment in our residential and commercial solar contracts,” said Radford Small,SolarCity’s Executive Vice President of Global Capital Markets. “Cash equity enables SolarCity to monetize a high percentage of cash flows to maximize upfront financing proceeds. This transaction is an exciting addition and diversification of our long-term financing options for solar assets.”
“We are pleased to partner with SolarCity in this transaction which represents an excellent opportunity to acquire long-term, contracted cash flows in renewable energy,” said Recep Kendircioglu, Managing Director, Power & Infrastructure at John Hancock. “This investment further supports John Hancock’s commitment to clean energy and sustainability.”
The portfolio of assets included in the first transaction is a representative sample of SolarCity’s current customer base. The average FICO score of the residential customers in the portfolio is 744, and the commercial customers include a number of national brand retail locations. The projects were spread among 18 states with no single state representing more than 35% of the portfolio, and the vast majority of the installations were completed in 2015. (Original Source)
Shares of SolarCity closed yesterday at $29.55, down $0.77 or -2.54%. SCTY has a 1-year high of $63.79 and a 1-year low of $16.31. The stock’s 50-day moving average is $27.92 and its 200-day moving average is $32.07.
On the ratings front, SolarCity has been the subject of a number of recent research reports. In a report issued on April 12, Deutsche Bank analyst Vishal Shah reiterated a Buy rating on SCTY, with a price target of $49, which represents a potential upside of 65.8% from where the stock is currently trading. Separately, on April 11, Merrill Lynch’s Krish Sankar reiterated a Buy rating on the stock and has a price target of $40.
According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Vishal Shah and Krish Sankar have a total average return of -21.0% and -7.0% respectively. Shah has a success rate of 29.9% and is ranked #3828 out of 3838 analysts, while Sankar has a success rate of 41.7% and is ranked #3538.
The street is mostly Bullish on SCTY stock. Out of 13 analysts who cover the stock, 7 suggest a Buy rating , 5 suggest a Hold and one recommends to Sell the stock. The 12-month average price target assigned to the stock is $38.50, which implies an upside of 30.3% from current levels.