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Baird Names SolarCity Favorite Pick in 2014, Buying Opportunity Next Week

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In a report published Thursday, Baird Equity Research analyst Ben Kallo reiterated his Outperform rating on SolarCity (NASDAQ: SCTY) and raised the price target from $71.00 to $81.00. Baird named SolarCity as its favorite pick for 2014.

Kallo updated Baird's NPV model to include higher MW deployments in 2016 and discounted cash flows to YE: 2014. The analyst noted that SolarCity opened 10 operating centers in Northern California and is expected to meet 2014 guidance of 475 MW-525 MW. Baird added that SolarCity had approximately 26.2% of the U.S. solar market in 2Q13, a higher percentage than the combination of the next eight competitors. Kallo commented that the company is expecting an approximate 80% growth at the midpoint of 2014.

Based on the increasing demand, Baird forecasts that residential and commercial markets will grow 20% and 13.8% y/y, respectively. The analyst reported that SolarCity should capture additional market share through its financing options and scale. Kallo also expects "further reductions in SCTY's financing costs as it brings additional asset-backed securities to market. Additionally, SCTY is exceeding its cost reduction road-map targets and should see lower labor costs/watt with the ZEP racking system."

The analyst reminds investors that the lock-up period for approximately 51 million shares expires on January 14. This weakness from the pressure on shares, could allow a buying opportunity.

SolarCity closed at $66.18 on Wednesday and shares have traded as high as $69.91, up 5.636%, following Baird's note.

Latest Ratings for SCTY

DateFirmActionFromTo
Nov 2016Axiom CapitalDowngradesHoldSell
Oct 2016Axiom CapitalUpgradesSellHold
Aug 2016Raymond JamesDowngradesStrong BuyMarket Perform

View More Analyst Ratings for SCTY
View the Latest Analyst Ratings

Posted-In: Baird Equity Research Ben KalloAnalyst Color Price Target Reiteration Analyst Ratings

 

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