Market Overview

Solar City Is Avondale's Top '16 Pick In Renewable Energy Sector

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  • The share price of SolarCity Corp (NASDAQ: SCTY) has surged 66.52 percent over the past month, rising to a high of $58.722 on December 22.
  • Avondale’s Michael Morosi has maintained a Market Outperform rating on the company, with a price target of $65.
  • While naming the stock the Best Idea for 2016 in renewable energy, Morosi mentioned that SolarCity was well positioned in the rapidly maturing rooftop solar market to benefit from significant value creation.

Analyst Michael Morosi said, “With the removal of key policy overhangs at both the federal and state level, investors can refocus on the fundamentals of the rooftop solar industry, which is characterized by 30+ percent annual installation growth from a base of 1 percent penetration of over $100B in annual revenue.”

The residential solar market is expected to the biggest beneficiary in the near term of the five-year extension of the renewable energy investment tax credit. Morosi believes that this is not reflected in SolarCity’s current stock valuation.

According to the Avondale report, “While net metering remains subject to challenges in 20+ rate cases across the US, we believe pro-solar policies will be generally upheld, and SolarCity, as the low-cost provider in the industry, is in a position to compete with retail electricity in a variety of policy outcomes.”

In addition, SolarCity’s asset monetization model, combined with the evolving regulatory environment, is expected to lead to opportunities for the company to enter into new partnerships and create value via utility owned rooftop solar.

Latest Ratings for SCTY

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

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Posted-In: Avondale Michael MorosiAnalyst Color Long Ideas Reiteration Analyst Ratings Trading Ideas

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