SolarCity (SCTY) ABS Offerings are Evolutionary Step Toward Lower-Cost Financing - Roth

Roth Capital maintains its Neutral rating and $80 price target on SolarCity (Nasdaq: SCTY) following pricing of its asset-backed securitization (ABS).

Analyst PHilip Shen sees the latest ABS transaction as a step in the right direction toward lower-cost financing. By varying important variables, such as the advance rate, maturity, and underlying asset profiles, we believe SCTY is attempting to gain an understanding of demand for its ABS product, the analyst said.

There are some differences in the underlying profiles of SolarCity's two ABS offerings. Average contract escalators decreased in ABS 2014-1 to 1.6% vs. 2.1% for ABS 2013-1. Weighted average FICO score increased to 767 vs. 762 in the prior ABS deal. The latest offering includes 6,596 systems and is comprised of 87% residential systems vs. SCTY’s prior offering of 5,033 systems at a 71% residential mix. SCTY’s weighted average electricity price of 15c/kWh appears similar in both ABS offerings, Shen noted.

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 $63.75 yesterday.

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