Deutsche Bank Starts SolarCity (SCTY) at Buy; Install Base Expected to Double

January 16, 2014 7:20 AM EST
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Price: $20.34 --0%

Rating Summary:
    4 Buy, 16 Hold, 2 Sell

Rating Trend: Down Down

Today's Overall Ratings:
    Up: 22 | Down: 32 | New: 34
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Deutsche Bank initiated coverage on SolarCity (NASDAQ: SCTY) with a Buy raating and a price target of $90.00. Analyst Vishal Shah expects SolarCity's install base to double through 2015 and 2016.

"SCTY is one of the pioneers in the residential solar leasing market and is poised to benefit from accelerating growth of distributed generation as retail electricity customers switch to solar and increasing number of US states achieve grid parity by 2016 timeframe. We expect SCTY's installed base of solar customers to roughly double exiting 2014 and believe growth could accelerate in the 2015/16 timeframe. Declining system costs, customer acquisition costs, financing costs and rising volumes should drive significant scale benefits and operating leverage in the model," said Shah.

"We estimate SCTY's market penetration is ~0.2% in existing markets and believe cumulative MW deployed can reach at least ~3GW by 2016 which would still imply only ~1% market penetration. Our 2016 estimates are likely conservative as the company has a target to reach ~1M customers implying ~6GW deployed by mid 2018 timeframe. We also assume SCTY's market share of the US residential market decreases from ~30% in 2013 to ~17-18% by 2016 timeframe, implying considerable room for upside. Even at ~6GW deployment, SCTY's penetration of the US residential market would be less than 2.5%," added the analyst.

For an analyst ratings summary and ratings history on SolarCity click here. For more ratings news on SolarCity click here.

Shares of SolarCity closed at $65.55 yesterday.

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