SolarCity Shares Edge Lower As JP Morgan Downgrades To Neutral

JP Morgan’s Paul Coster downgraded the rating for SolarCity Corp SCTY to Neutral, while reducing the price target from $44 to $29.

While SolarCity’s shares appear undervalued, there is currently elevated risk and uncertainty around the business model, which could exert pressure on the company’s stock in 2016, analyst Paul Coster said. He added, however, that the downgrade in rating was neither “a call to sell” existing positions in SolarCity nor was it a call to short the stock.

Coster added that there were “potential positive catalysts ahead,” the primary one being financing transactions that highlight the company’s ability to “tap incrementally lower cost capital.”

SolarCity’s shares lost 2 percent in premarket trade on February 23.