SolarCity (SCTY) Still 'Buy'-Rated at Roth; Would Likely Withstand Peer Pricing Pressure

Roth Capital affirms its Buy rating and $98 price target on SolarCity (Nasdaq: SCTY) following Q3 results reported Thursday night.

Analyst Philip Shen offered he following thoughts:

Heading into Q3, investors were focused on SCTY's unit economics and how it would trend given the recent introductions of fixed pricing and its solar loan product. Regarding the new pricing plan, management indicated that it does not foresee any changes and expects to hold current pricing through much of next year. However, if competitors cut pricing, it appears SCTY's response would likely be to follow suit. Given SCTY's best-in-class economics, we would expect the company to withstand downside pricing pressure much better and longer than its peers.

On the MyPower or solar loan front, management continues to see meaningful solar loan product mix of 40-50% by YE'15. While there remains some uncertainty around the NPV/W of the loan product, we believe that the company may have a few levers to pull as it tinkers with finding the right balance between driving consumer demand and economic value creation.

Over the near term, we believe the company's unit economics should remain stable. As the solar loan starts to gain traction and develops into a larger percentage of product mix, we would expect SCTY to modulate its loan product levers to maximize its NPV/W, while providing a compelling offering to consumers.

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

SolarCity closed at $54.44 yesterday.

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