Current Levels Provide "Enticing" Entry Point for SolarCity, Raymond James Says

Shares of SolarCity have popped 4.4 percent in Friday's pre-market trading after Raymond James upgraded shares from Market Perform to Outperform and announced a $75 price target. Analyst Pavel Molchanov believes current levels provide an “enticing” entry point, “hence this tactical upgrade.” Valuation “remains a source of of complexity,” but there is “potentially impactful near-term catalysts” on the horizon, said the analyst. The second solar securitization is expected due in April, said Molchanov. The Raymond James analyst went on to recall the first solar securitization that bumped the stock 11 percent the day of announcement, even though the deal was “fully telegraphed.” Molchanov expects the second deal to be “at least $100M, and the coupon may be lower as well.” The first solar securitization deal was for $54.4 million in notes due 2026, with a “lower than expected” coupon of 4.8 percent, which “impressed” the market, the analyst said. “Faster-than-expected module price correction, while not overly needle-moving, provides a positive backdrop for all downstream pure-plays,” Molchanov said. Molchanov does not assume further market share gain in his current valuation model, so additional gains would be “icing on the cake.” Shares of SolarCity have been on a wild ride so far in 2014. The stock initially gaining 55 percent, hitting a high of $88.35, but then gave it all back in March.