Credit Suisse Cuts Estimates for SolarCity Corp (SCTY); Restricts Rating

Credit Suisse analyst Patrick Jobin weighs in on SolarCity Corp (NASDAQ:SCTY) following disappointing 2016 guidance and the approval of a merger with Tesla. Shares of SolarCity are currently trading at $24.48, up $0.06 or 0.25%.

The analyst believes that the company’s preannouncement of lowered 2016 guidance demonstrates weak market trends. Jobin revises his EPS for 2016, 2017, and 2018 to $9.42, $7.97, and $8.42, respectively, in order to reflect this preannouncement. Though his estimates are revised downward, he concedes that the preannouncement was better than expected.

The analyst explains, “SCTY preannounced Q2 installations of 210 MW above prior guidance of 185 MW. Bookings grew 40% sequentially (implies ~224 MW, vs our est of 175 MW), but are still down -43% y/y. We estimate that the combination of higher installations and bookings in Q2 will lower Q2 all-in costs to $2.98/w (vs prior est of $3.17/w). SCTY will report Q2 results on August 9 after markets close.” Despite a better than expected preannouncement, the analyst still believes that the company guided a weak second half.

The company’s merger with Tesla has also taken one step forward. Jobin explains that Tesla’s acquisition price of SCTY will rest at $25.37 per share. According to the analyst, the companies expect the merger deal to close by 4Q16, but it is still subject to SEC review and independent shareholder approvals.

The analyst issues a Restricted rating without a price target, meaning that due to pending transactions or other in-effect laws, the analyst cannot issue a rating at this time.

As usual, we recommend taking analyst notes with a grain of salt. They are often successful in moving the stock price, but you always need to take things into perspective. TipRanks shows that Patrick Jobin is ranked #3,887 of 4,071 analysts. He maintains a success rate of 33% and realizes an average loss of 15.5%. When rating SCTY, the analyst upholds a 25% success rate and realizes an average loss of 24.6%.

According to TipRanks, only 18% of analysts issue a Buy rating for SCTY at this time. 71% of analysts maintain a Hold rating for the stock, and the remaining 11% uphold a Sell rating for shares of SCTY.

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