Market Overview

Raymond James: SolarCity, 8Point3 Still Our Top Solar Picks


Despite continued concerns regard the solar sector, most recently ignited by Sunedison Inc (NYSE: SUNE)'s rumored Securities and Exchange investigation, the sector is still worth investor attention.

While some players in the sector have seen selloffs attributed to SunEdison's conundrum, analysts at Raymond James still have their favorites.

Angelica Jarvenpaa, with Raymond James, told Benzinga Tuesday the firm's top picks in the space are SolarCity Corp (NASDAQ: SCTY) and 8Point3 Energy Partners LP (NASDAQ: CAFD). SunEdison and fellow struggling solar name TerraForm (Terra Form Power Inc (NASDAQ: TERP); TerraForm Global Inc (NASDAQ: GLBL)) are not covered.

Commentary On The Solar Space

Jarvenpaa told Benzinga, "In all, SunEdison's troubles have been widely known for a while and, thus, the solar space has been able to put out two quarterly results showing strength in order to differentiate themselves from SUNE's troubles."

"That being said, the delays in TerraForm's reporting and delays in the company's dropdown schedule initially caused concerns for the space, especially towards the MLPs and Yieldcos – CAFD included," Jarvenpaa explained.

Related Link: Concerns At SunEdison Might Be Impacting Several Other Solar Stocks

"However, as FLSR [sic; First Solar, Inc. (NASDAQ: FSLR)], SPWR (SunPower Corporation (NASDAQ: SPWR)), and others met their dropdown timelines and some even exceeded expectations; the market seems to have understood that SunEdison's news is specific to SunEdison and TerraForm only."

Raymond James On SolarCity: Strong Buy, PT Of $26.35

In the firm's most recent report on SolarCity, analyst Pavel Molchanov upgraded the stock from Outperform to Strong Buy.

"In an unforgiving market, results that would normally be ho-hum tend to be treated as a crisis – thus, SolarCity's 4Q headline miss and softer 1Q guidance take the stock down ~30 percent after hours to its lowest level since late 2013. Given this below NPV entry point – which we never thought we'd see – we are upgrading SCTY from Outperform to Strong Buy.

"Ignoring the quarterly noise, the big picture is unchanged: SolarCity's dominant position as the largest player in U.S. residential solar, and its pioneering role in financing innovations, provide leverage to a major long-term theme in clean tech: the inexorable rise of distributed generation," Molchanov concluded.

Raymond James On 8Point3 Energy Partners: Strong Buy, PT Of $22

In late January, Molchanov published a company comment on 8Point3 Energy, stating, "Within the emerging asset class of U.S.-listed yieldcos, 8point3 is unique […] Backed by two of the largest U.S.-based PV project developers – SunPower and First Solar – there is ample room for growth via dropdowns from the sponsors, and potentially third-party acquisitions as well."

"We also like the consistent, disciplined growth strategy. Particularly given the stock's non-fundamental, sentiment-based multiple compression since the IPO in June 2015, we reiterate our Strong Buy rating," Molchanov stated.

At time of writing, 8Point3 Energy was down roughly 3 percent on the day at $14.01 and SolarCity was up roughly 2.5 percent at $22.21.

For comparison, TerraForm Power was seen down 5.8 percent, TerraForm Global was down more than 22 percent and SunEdison was down 57 percent.

Latest Ratings for SCTY

Nov 2016DowngradesHoldSell
Oct 2016UpgradesSellHold
Aug 2016DowngradesOutperformNeutral

View More Analyst Ratings for SCTY
View the Latest Analyst Ratings

Posted-In: Angelica Jarvenpaa Pavel MolchanovAnalyst Color Long Ideas News Analyst Ratings Movers Trading Ideas


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