5 Reasons Why SunEdison (SUNE) is Down - UBS
UBS Analyst, Julien Dumoulin-Smith, highlighted the 5 key factors in SunEdison (NYSE: SUNE) weakness in a concise note:
1) lower margins on retained projects than expected ($0.26/W) vs. overall 2016 margin expectations of $0.36/W;
2) Mgmt confidence on the pending VSLR deal, emphasizing it simply had not had time to close the deal; recall a potential renegotiation of the deal would be perceived quite positively, however, mgmt was adamant in asserting there was no walking.
3) LAP arbitration risk, with the counterparty seeking $150 Mn in damages
4) O&M refunds to TERP on higher than budgeted costs on FirstWind portfolio
5) higher 3Q Opex cost trends, albeit with some adjustments ($361 Mn in total 3Q15 opex includes $66M of '1x and other' incl stock comp and UK wind-down, $54 Mn from the IPO, and $65 Mn in restructuring/impairments). This higher opex compares vs. original FY15 guidance of $590Mn and vs. 2Q16 run-rate target of $150 Mn.
Maintain Neutral rating and drop PT to $6 from $9
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Shares of SunEdison closed at $5.77 yesterday.