Has some of the luster gone off Elon Musk, chairman of SolarCity Corp (NASDAQ:SCTY) and Tesla Motors Inc (NASDAQ:TSLA)? Both companies are declining sharply today in spite of solid results. SolarCity shares fell more than 14%, but analysts at JPMorgan remain fairly positive on the company, reiterating their Overweight rating and $68 per share price target.
SolarCity’s only failure: surprise
When SolarCity Corp (NASDAQ:SCTY) reported its results this week, they were in line with expectations, and investors weren’t happy with that. They wanted more. However, some of the company’s performance metrics like retained value and retained value per watt did beat expectations. Analysts Paul Coster, Mark Strouse and Paul J Chung at JPMorgan said this suggests positive momentum toward the company’s long-term goals.
They say the company’s fourth quarter guidance is roughly in line with their expectations, although there are some differences. Also the company left its 2014 megawatt target the same, so they said it looks like the growth momentum around the company is on track. Their initial take on SolarCity’s results was a mild positive, but overall they saw the latest earnings report as “uneventful.”
SolarCity’s metrics look solid
The analysts note that SolarCity Corp (NASDAQ:SCTY)’s operating and financial metrics both look good. Operating metrics either met or exceeded expectations, with 78 megawatts deployed and other numbers which matched the company’s preannouncement. There was a positive surprise in retained value, which was $846 million, compared to JPMorgan’s estimate of $816 million. They said this was the result of a better retention rate per contract than they expected.
SolarCity also reported better operating lease revenue than expected, coming in at $24.8 million. Total revenue was $48.6 million, which beat their expectations. They reported that the mix shift toward systems sales pressured the company’s gross margins, which fell to 36.1%. However, reported losses per share were less than expected.