In a research report published Friday, Credit Suisse analyst Patrick Jobin downgraded shares of rooftop solar giant SolarCity Corp (NASDAQ:SCTY) from Buy to Neutral, while reducing the price target to $27.00 (from $38.00), which represents a potential upside of 14% from where the stock is currently trading.
Jobin explained “On deeper reflection of the proposed acquisition of SCTY by TSLA, and discussions with TSLA shareholders, we increase our probability of a deal being consummated at, or near, the proposed terms to 60-70% despite our concerns on corporate governance along with limited strategic and financial rationale for the transaction in the near-term. As a consequence, we lower our SCTY target price to $27 and downgrade our rating to Neutral to reflect the preliminary acquisition proposal at what now equates to ~$25.9-$27.8 per share at the 0.122x-0.131x exchange ratio presenting only limited upside from current levels (the actual mechanics of the proposal are not disclosed and no definitive agreement has been reached although there is apparently unanimous support from both boards). Note that our fundamental view that SCTY is grossly undervalued remains unchanged.”
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Patrick Jobin has a yearly average return of -15.3% and a 32% success rate. Jobin has a -24% average return when recommending SCTY, and is ranked #3780 out of 4001 analysts.
Out of the 16 analysts polled by TipRanks, 4 rate SolarCity stock a Buy, 10 rate the stock a Hold and 2 recommend a Sell. With a return potential of 21%, the stock’s consensus target price stands at $28.50.
Skyworks Solutions Inc
In addition, Mizuho analyst Vijay Rakesh downgraded shares of smartphone component maker Skyworks Solutions (NASDAQ:SWKS) from Buy to Neutral, while lowering the price target to $68.00 (from $99.00).
Rakesh commented, “We believe SWKS should see strength with the Huawei ramps as a key supplier, and should also see strength with the iPhone 7 ramp, but we believe it needs to diversify as the core handset market (~75% of revenue) slows with increasing penetration and potential demand uncertainty. AVGO has diversified over the last two years from handsets accounting for ~50% of revenue to 22% now. While SWKS made a disciplined attempt at buying PMC-Sierra in 2015, we believe CFO Don Palette, and new CEO Liam Griffin, should start to get more aggressive given the slowdown in the handset space.”
Furthermore, “With the iPhone 7 using an INTC modem on potentially 30% of the mix, it sets up QRVO for share gains given its legacy relationship though we believe SWKS has been able to maintain share on the iPhone 7 with increasing content.”
According to TipRanks.com, analyst Vijay Rakesh has a yearly average return of 28.1% and a 70% success rate. Rakesh has a 35.5% average return when recommending SWKS, and is ranked #10 out of 4001 analysts.