to customers at Best Buy Co., Inc. (NYSE:BBY) stores. Unfortunately for the company today though, shares have taken a dive. Goldman Sachs analysts see this as a buying opportunity, however, in the wake of their meetings with the company’s management.
SolarCity “poised for upside”
Analysts Brian Lee, Thomas Daniels and Britt Boril say they see plenty of upside in the future for SolarCity Corp (NASDAQ:SCTY). They said growth of the U.S. rooftop solar industry and the own / operate economics contribute to the upside they see.
The Goldman team also said this year looks like it will be a big execution one for SolarCity Corp (NASDAQ:SCTY), as the company remains confident in its 500 megawatt volume guidance for the year. That number is the midpoint of the guidance range provided by SolarCity.
SolarCity’s risks seem less worrisome
SolarCity Corp (NASDAQ:SCTY) management said they see “operational bottlenecks” as being less of an issue this year compared to last year. They also said that the availability of financing is still fluid and also augmented by solar ABS. They expect velocity in that area to pick up throughout this year and, in the long term, doubling annually. The Goldman Sachs team calls this “a key bogey” to reach 1 million customers by 2018.
In addition, they believe competition is not as intense as they previously thought. They note that a sort of market share grab in the U.S. residential market is probably going to happen before the step down in tax credits in 2017. However, they believe SolarCity Corp (NASDAQ:SCTY) could maintain or even expand its market share from more than 30% today. They see the company’s growing scale as offering a big advantage in costs for financing and per unit costs. They also said it looks like referrals business is giving the company a boost as well.
Batteries important to SolarCity
The Goldman Sachs team also sees upside for SolarCity Corp (NASDAQ:SCTY) in batteries. With 10 shipments each week, that segment of the business is still small. However, they said as the costs of that business grow to levels which are more competitive over the next three to five years, this technology could transform this market.
They see bigger solar systems, resulting in more potential revenue, full hedging of net metering risk, ad a larger total addressable market as being especially beneficial.
They continue to rate SolarCity Corp (NASDAQ:SCTY) as a Buy with an $88 per share price target.