Goldman: Buy SolarCity, Solaredge And SunPower

In a report published Friday, Goldman Sachs analyst Brian Lee said that Solar stocks had declined over the past month on macro factors, rather than on soft fundamentals, while there were "solid" catalysts in the back half of the year. The analyst maintained Buy ratings on

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. Analyst Brian Lee mentioned that US solar stocks were down 14 percent in the past month, versus a flat S&P 500. The pressure on stocks was "largely on macro factors," including Greece, China and crude. Since the decline was not based on soft fundamentals, there could be opportunity for investors to "leg into stocks with solid 2H catalysts." Lee identified SolarCity, SolarEdge and SunPower as the best stocks that were "setup for potential beats vs. expectations." Referring to SolarCity, Lee commented that the company was expected to beat install volumes for the second consecutive quarter and report "largely in line" headline results. "That said, keys to the quarter, in our view, are widely anticipated CAFD disclosure and visibility into a potential YieldCo strategy, particularly following recent M&A in the sector." Unlevered CAFD could approach $150mn and beat expectations, with even more robust run-rate metrics. Lee has a price target of $85 for SolarCity. Goldman Sachs expects SolarEdge to beat F4Q15 EPS forecasts "by several pennies," backed by gross margin upside, since recent checks had suggested that ASPs were "largely flattish" q/q while volumes remained robust due to share gains. The company's shares had plunged 24 percent in the past month, versus a 3 percent decline in RUT. Expectations appeared "muted," with fear of ASP pressures mounting. Lee has a price target of $42 for SolarEdge. Lee said that SunPower could report a beat on better EBITDA. "We see 2015 guidance and potential 2016 metrics as keys to the quarter, with a focus on adj. EBITDA likely to provide visibility into value from dropdowns into 8point3." While the company could record in-line EBITDA in 2015, there was around 20 percent upside to the 2016 expectations, the report mentioned. Goldman Sachs has a price target of $37 for SunPower.