Deutsche Bank Affirms SolarCity (SCTY) at Buy; Market Still Undervaluing Upside Drivers
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Deutsche Bank affirms SolarCity (Nasdaq: SCTY) at Buy with a target price of $90 following the company's recent asset-backed security offerings.
Analyst Vishal Shah thinks the risk-reward on SolarCity is still attractive. The analyst commented, Solarcity shares have underperformed the broader market over the past 5 weeks due to concerns over regulation, increased competition and declining profitability ... we believe investors are largely discounting the potential upside resulting from lower financing costs, grid parity beyond 2016, improving technology/BoS costs and potential scale benefits driving share gains over time. While there has been a significant focus on retained value per watt and concerns that this metric may be peaking, we note that retained profit per share (retained value times annual installations) will likely continue to increase at a ~45% CAGR through 2016.
Shah sees downside risk limited to $55 per share based simply on cash flow from SolarCity's installed base through 2015 with the assumption that business will wind down in 2016 following ITC expiration.
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 $60.50 yesterday.
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