SolarCity (SCTY) CL-Buy Maintained at Goldman Following Investor Meetings

Goldman Sachs maintained a Conviction Buy on SolarCity (NASDAQ: SCTY) with a price target of $96. Analyst Brian Lee said investor meetings highlight its status as a premier rooftop play.

"We see the all-in cost of c.$3/W well below peers given scale advantages, with G&A expenses in particular appearing to have most leverage in the near-to-mid term as MW growth potentially leads to sub-$0.05/W (vs. c.$0.25/W today) – implying a 7%-8% reduction in overhead costs alone. Plus, tax equity costs of 8%-9% on new funds are below 10%-14% for most peers, in our view, with access to solar ABS funding providing added cost advantage that is 1-2 years ahead of peers," said Lee.

"Flattish near term, ASP visibility for 2H14 is as good as it has been in 9 months, according to SolarCity. Tier-1 Chinese modules – now 40%-60% of supply, down from 85% – are locked in at mid-$0.70/W, in line with recent deals with REC/ Kyocera and well below worst-case expectations stemming from US-China-Taiwan tariffs," he added. "Near-term pricing a likely tailwind. Checks suggest that in 3Q14 SolarCity is raising PPA prices by c.10% in select utility territories (e.g. Northeast) – a potential tailwind into 2015 given growth upside in states such as NY/NJ."

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 $70.48 yesterday.

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