Roth Capital Raises Target on SolarCity (SCTY) 22.5% Following Q2 Results

Roth Capital boosts its price target on SolarCity (Nasdaq: SCTY) from $80 to $98 and affirms its Buy rating following Q2 results.

Analyst Philip Shen offered some overall thoughts on SolarCity following Q2 numbers: With Q2 bookings much better than expected, we expect bookings to accelerate into Q3 given the backdrop of a robust US market. Additionally, RV/W was better than expected at $2/W after adjusting out the impact of LMC II. On an opex/W basis, the company also demonstrated some leverage as opex/W booked improved to 45c/W from Q1 of 60c/W and Q2'13 of 63c/W. All in, we believe SCTY is well on track to hit and likely exceed, in our view, its 2014 guidance midpoint of 525MW. Given the outperformance of bookings and RV/W and the outlook for the rest of 2014, we expect the stock to trade higher on the positive sentiment.

Key points for investors:

1. (1) SCTY released a 2017 installation cost target of $1.90/W vs. $2.29/W in Q2'14. Impressively, the company has lowered its cost structure by 87c/W down 28% since 2012. The $1.90/W is significant as management believes there will be "thriving " demand at this cost structure;

2. The company expects securitizations to take place on a quarterly basis to match deployment flow and could see ABS deals remain in the $200mn range with potential for as much as $300mn; and

3. With the stronger growth comes greater WC needs. The company is investing in customer growth and no longer expects to be CF positive in 2014.

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

SolarCity closed at $75.63 yesterday.

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