Morgan Stanley Cuts SolarCity Price Target On 'More Conservative' Growth Outlook

Morgan Stanley's Stephen C Byrd maintained an Overweight rating for

, while reducing the price target from $78 to $52, citing a conservative growth outlook. SolarCity may continue to generate robust growth over the next several years. Analyst Stephen Byrd mentioned, however, that SolarCity's current stock valuation reflects highly bearish growth prospects and the risks associated with the company. Investors have been questioning SolarCity's 2016 guidance of installing 1.250 MW especially in light of the company's exit from Nevada, the elimination of MyPower and developments in Massachusetts, Byrd pointed out. The analyst believes that the company would find it difficult to achieve its 2016 MW guidance and raise large amounts of tax equity and debt at reasonable terms. This means SolarCity will need to find alternative funding sources for its new installations. "While the company may be able to grow faster in other markets as an offset, we are lowering our 2016 MW forecasts to assume SCTY falls ~8% short of its goal," the Morgan Stanley report noted. Another area of concern is the impact of the potential state-level regulatory changes on rooftop solar players. Byrd believes that such changes may make rooftop solar uneconomic or less economic.