Cowen Slaps $50 Target On SolarCity

• SolarCity Corp SCTY shares have declined more than 27 percent in the last 3 months, although having risen above the $60 mark on August 5.
• Cowen analyst Jeffrey Osborne initiated coverage of the stock with a Market Perform rating and a price target of $50.
• While SolarCity is a leading residential PV provider, Osborne expects several trends to challenge further market share expansion.

Analyst Jeffrey Osborne said that with the passing of ITC by the Congress in 2005, the US residential solar market has grown by 50 percent each year and the cost of installing solar has dropped by more than 70 percent.

“While SolarCity has been a primary beneficiary and contributor to this growth, as well as a likely continued leading participant, we find the upside benefits driven by the industry tailwinds to be mitigated by advancing competition, an aggressive cost reduction profile that needs to be successfully implemented, and an over-exposure in general to the U.S. solar market, given
upcoming subsidy changes,” Osborne added.

Although SolarCity continues to lead the industry in terms of cost advantage, several of its peers are narrowing the gap. Osborne expects SolarCity to achieve $2.50/W in total cost by 2017, albeit only on a volume-adjusted basis.