SolarCity: The Shares At Current Levels Represent An Attractive Entry Point, Says Roth Capital


In a research report published Monday, Roth Capital analyst Philip Shen maintained a Buy rating on SolarCity (NASDAQ:SCTY) with a $98 price target, following investor meetings with SCTY’s VP of IR, Aaron Chew, and Brad Buss, SCTY’s new CFO.

Shen said, “Despite recent noise surrounding the company’s lowered NPV/W for its typical customer, we believe SCTY’s business and market position remain quite attractive. With the stock down 22% over the past two months, we believe shares at current levels represent an attractive entry point.”

Furthermore the analyst noted, “Following its recent deal roadshow, SCTY released a new investor presentation that appears to have caught the market by surprise. NPV/W for a typical 6.4kW system is now $1.75 down 20% vs. prior of $2.19. We believe the 44c/W difference can be explained by three factors: (1) Establishment of fixed CA pricing of ~15c/ kWh vs. prior of ~17c/kWh; (2) Using the actual blended escalator of 2.0% vs. prior of 2.9%%; and (3) Lowering of FMV from ~$5.50 to $4.75/W. While some erosion of NPV/W was to be expected after the company discussed fixed pricing on its Q2 earnings call, NPV/W serves as a proxy for RV/W, and its reduction appears to have caused investor concern. In its history, the company has made few pricing changes. After rolling out fixed pricing in other states, we would not expect many—if any—pricing changes over the near to medium term.”

According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Philip Shen has a total average return of -3.7% and a 29.0% success rate. Shen has a -8.8% average return when recommending SCTY, and is ranked #3082 out of 3315 analysts.

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