Here Comes the Sun: Analysts Chime In on SolarCity Corp (SCTY) and Vivint Solar Inc (VSLR)


Analysts weigh in on solar energy firms SolarCity Corp (NASDAQ:SCTY) and Vivint Solar Inc (NYSE:VSLR), as SolarCity announced a large cash equity financing deal, and Vivint Solar announced that the CEO will depart the company and current COO will take charge as the interim CEO. Let’s take a closer look:

SolarCity Corp

On Monday, SolarCity announced a $227 million cash equity financing deal with John Hancock, who invested in SolarCity’s funds for ~1.13/w. John Hancock’s $227 million represents a majority stake of 9% in a fund with 201 MWs (73% residential, 27% commercial). SolarCity retained a minority stake in the fund with an estimated 5% ownership.

Following the deal, Credit Suisse analyst Patrick Jobin reiterated an Outperform rating on shares of SolarCity with a price target of $62.00.

Jobin noted, “While this transaction directly contradicts one of the bear arguments in the stock, namely the cost of capital for the space exceeds the origination returns and that capital is not available to fund growth, we remain modestly cautious into earnings next week where we believe the tepid booking trends may lead to an annual guidance cut.”

According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Patrick Jobin has a yearly average loss of 14.3% and a 33% success rate. Jobin is ranked #3673 out of 3911 analysts.

Out of the 14 analysts polled by TipRanks (in the past 3 months), 8 analysts rate Alibaba stock a Buy, 5 are Neutral, and one analyst rates the stock a Sell. The stock’s consensus target price is $46.83, marking a potential upside of 77.05%.

Vivint Solar Inc

Vivint Solar announced that CEO Greg Butterfield is stepping down and David Bywater, the current COO of Vivint Smart Home will serve as the CEO on an interim basis while VSLR begins its search for a permanent CEO over the coming weeks.

Following the CEO’s departure, analyst Krish Sankar of Merrill Lynch reiterated an Underperform rating on Vivint Solar shares, with a price target of $2.00.

Sankar sees the sudden departure of the CEO as “slightly negative” especially since Mr. Butterfield laid out his 2016 outlook and cost reduction targets a few weeks prior to the recent announcement. Sankar has not changed his underperform rating as he remains concerned regarding market share loss and cost reduction ability. Sankar believes that a corporating financing event (debt or equity) will be likely in 2H16 or 1H17.

According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Krish Sankar has a yearly average loss of 7% and a 42% success rate. Sankar is ranked #3538 out of 3911 analysts.

Out of the 5 analysts polled by TipRanks (in the past 3 months), 1 analyst is Bullish on Vivint Solar, 2 analysts are Neutral on the stock and two analysts are Bearish on the stock. The stock’s consensus target price is $4.30, marking a potential upside of 49.83%.