Market Overview

Sunedison Shares Rebound From Lows; Analysts Don't Seem Concerned With Appaloosa Suit News

Share:
Sunedison Shares Rebound From Lows; Analysts Don't Seem Concerned With Appaloosa Suit News

Investors in SunEdison Inc (NYSE: SUNE) received a spook Wednesday morning, as a Reuters report of a suit against the company by David Tepper and Appaloosa Investment Limited Partnership hit newswires.

While shares initially moved higher following the opening bell at 9:30 a.m. EST, sellers stepped in after about 15 minutes to take the stock to a session low at $2.50, down about 18 percent. Over the course of the morning session, and amid seemingly reassuring comments from a couple Wall Street analysts, SunEdison shares are now trading just 3 percent lower.

The Benzinga Newsdesk, reaching out to the New Castle County Chancery Court in Delaware, has since confirmed the suit by Appaloosa related to TerraForm Power Inc. (NASDAQ: TERP)'s deal with Vivint Solar Inc (NYSE: VSLR).

Noted analyst Gordon Johnson of Axiom Capital, whose bearish comments on Benzinga's PreMarket Prep show contributed to a large selloff in SunEdison on Tuesday, seemed a bit skeptical about the apparent impact of Wednesday morning's news on the stock.

Johnson, speaking with Benzinga, pointed to the fact that TerraForm Power had previously offered, in filings with the SEC, a warning that SunEdison could harm shareholders in TerraForm.

Avondale's Michael Morosi offered several outcomes related to the report of the suit, suggesting that two of those scenarios could be wins for SunEdison.

"...the most likely scenario is that within the next two weeks SunEdison announces a deal to sell Vivint's operating assets to a third-party institutional investor and outlines its intent to find an offtaker for the development pipeline," Morosi said.

Another option, according to the Avondale analyst, would be an indefinite postponement of the deal until the suit is resolved.

Morosi said (emphasis Benzinga's):

"Depending on the outcome of the lawsuit, SUNE may have grounds to elect a "material adverse change" clause, allowing the company to break the transaction. While this would imply a reduction to run-rate deliveries and cash earnings, given resi's expected positive contribution to corporate average gross margin, note this outcome would have the effect of removing a key overhang for SUNE's shares leading to a potential re-rating of the shares."

Latest Ratings for SUNE

DateFirmActionFromTo
Mar 2016Stifel NicolausTerminatesHold
Mar 2016Axiom CapitalMaintainsSell
Mar 2016Avondale PartnersDowngradesMarket OutperformMarket Perform

View More Analyst Ratings for SUNE
View the Latest Analyst Ratings

 

Related Articles (SUNE + TERP)

View Comments and Join the Discussion!

Posted-In: Analyst Color News Hedge Funds Legal Top Stories Exclusives Intraday Update Analyst Ratings Best of Benzinga

Latest Ratings

StockFirmActionPT
HYMCBMO CapitalInitiates Coverage On
DEMorgan StanleyMaintains335.0
SBNYRaymond JamesMaintains138.0
CORTHC Wainwright & Co.Maintains32.0
CYBBFCitigroupDowngrades
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com