SolarCity's (SCTY) Price Target Reduced to $38 at Credit Suisse
Credit Suisse maintained an Outperform rating on SolarCity (NASDAQ: SCTY) but lowered its price target to $38.00 (from $62.00). The change follows disappointing Q1 results and guidance. Analyst Patrick Jobin said "existential questions" were raised by weak bookings.
"SolarCity seems to be faced with re-proving the merits of their business model each quarter – facing either operational, regulatory, capital, or competitive challenges – in addition to painfully, yet gradually, transitioning the strategy more towards value than growth, causing significant ownership rotation. This quarter is no different," said Jobin.
"As we vocally expected, bookings were very weak (60% q/q, -33% y/y) and annual guidance was cut to 1-1.1 GW or 16% to ~15-26% y/y growth. The magnitude of the bookings weakness and guidance cut, however, were both slightly more than we expected and the capital challenges facing the company will force investors to re-evaluate the merits, and valuation, of SCTY's business," added the analyst. "We take a more constructive stance given valuation while acknowledging some significant pressures and debatable strategic moves, along with the risks presented by any business that depends heavily on the capital markets."
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Shares of SolarCity closed at $22.51 yesterday.