8point3: Nothing But Execution

8Point3 Energy Partners LP CAFD reported its FQ1 results largely in line with expectations, while announcing its FQ2 guidance below expectations, primarily driven by the timing of distributions from its affiliates.

ROTH Capital’s Philip Shen reiterated a Buy rating on the company, with a price target of $18.

Well Positioned

“As the only pure solar yieldco backed by two of the most prominent global developers, we continue to believe 8point3 is well positioned for the long haul,” Shen mentioned.

The analyst believes that management’s conservative stance has been benefiting 8Point3 Energy, given that the company expects 12–15 percent dividend growth for 2016 and 2017, without the need for additional dropdowns.

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“At some point, the company will need to issue equity, in our opinion, but 8point3 was designed to endure and withstand the current market dislocation,” Shen pointed out.

FQ1 Results

The company reported its revenues for FQ1 below the consensus but slightly ahead of the estimates and in line with the guidance. Gross margins of 82 percent beat the consensus but was below the estimates.

The EPS for the quarter was well ahead of the estimates and the consensus, with the CAFD ahead of the estimates, driven by portfolio outperformance and timing of distributions on some projects.

FQ2 Guidance

8point3 Energy guided to FQ2 revenues of $11–$12 million, below the consensus and estimates, although the adjusted EBITDA guidance was more or less in line with expectations.

The revenue and EPS estimates for 2016 have been lowered.