Market Overview

SolarCity's $227M Financing Is A 'Major Catalyst'; Avondale Says Buy The Stock

Share:
SolarCity's $227M Financing Is A 'Major Catalyst'; Avondale Says Buy The Stock

SolarCity Corp (NASDAQ: SCTY) has announced a $227 million cash equity raise, a move that could ease the worries of traders concerned with the company’s softening guidance. Avondale Partners analyst Michael Morosi sees the cash financing as a “major catalyst” for the stock.

According to Morosi, market concerns over SolarCity’s growth are misplaced to begin with. Avondale sees some risk to the company’s 40 percent growth target, especially after such a weak Q1. However, he pointed out that SolarCity’s stock is not valued as a growth stock.

“With ~$15/share of net asset value on the balance sheet, the company’s DevCo is valued at 4x EV/Adjusted EBIT, which is not exactly consistent with a 40 percent grower,” Morosi explained.

Related Link: Oil Bounce Creates Tough Hedging Decisions For U.S. Shale Producers

SolarCity’s latest cash equity financing comes on the heels of more than $1 billion in capital that the company has raised in the past two months and will serve to improve the company’s cash flows and de-risk its portfolio.

Morosi believes the company is “firing on all cylinders” and that its successful financing endeavors should result in a re-rating of its stock. Avondale maintains a Market Outperform rating on SolarCity and a $40 price target for the stock.

SolarCity is down 46.0 percent so far in 2016.

Disclosure: The author holds no position in the stocks mentioned.

Latest Ratings for SCTY

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

View More Analyst Ratings for SCTY
View the Latest Analyst Ratings

 

Related Articles (SCTY)

View Comments and Join the Discussion!

Posted-In: Analyst Color Long Ideas News Financing Price Target Reiteration Analyst Ratings Trading Ideas Best of Benzinga

Latest Ratings

StockFirmActionPT
KALUBenchmarkUpgrades
YEXTDA DavidsonMaintains20.5
BYDB of A SecuritiesMaintains47.0
SAICMorgan StanleyMaintains98.0
PVHMorgan StanleyMaintains104.0
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