SolarCity Corp (NASDAQ:SCTY) reported its first quarter results on Wednesday. The Elon Musk-backed company’s losses narrowed to 26 cents a share or $24.1 million compared to a net loss of 54 cents or $40.9 million in the same quarter last year. SolarCity posted adjusted loss of 82 cents a share. Meanwhile, revenues more than doubled from $30 million last year to $63 million in the latest quarter.

SolarCity SCTY

SolarCity surprises the Wall Street with strong FY2015 installation guidance

Solid first quarter results and strong guidance prompted Baird Equity Research analysts Ben Kallo and Tyler Frank to raise their price target from $75 to $80. The research firm maintains its Outperform rating on the stock. SolarCity Corp (NASDAQ:SCTY)’s first quarter installations came in at the high end of guidance. The San Mateo-based company reported panel installations of 82MW, compared to the guidance of 78-82MW and beating the consensus estimate of 80MW. First quarter bookings of 136MW were well above Baird’s estimate of 110MW.

SolarCity Corp (NASDAQ:SCTY) raised its full-year 2014 installation guidance from 475-525MW to 500-550MW. However, the company’s current quarter installation forecast of 105-110MW fell short of Baird Equity Research’s estimate of 120MW. Anyway, SolarCity’s second quarter deployment is likely to benefit from Nevada where the company plans to double its workforce from 400 to 800 employees.

What really surprised the Wall Street was its FY2015 deployment guidance of 900MW-1GW. Wall Street was expecting 2015 installation of 700MW. SolarCity Corp (NASDAQ:SCTY)’s retained value per watt fell from $1.88 in Q4 to $1.82. But it was mainly due to commercial bookings. The average retained value per watt inched up slightly to $1.56, thanks to reduction in module prices and financing costs. Baird analysts believe it will continue to increase as the company deploys more projects.

SolarCity is a long-term cash flow story

Baird Equity Research believes that SolarCity Corp (NASDAQ:SCTY) is a long-term cash flow story rather than a short-term profitability story. The company’s near-term focus is on taking advantage of the tax equity environment to boost its panel installations as much as possible before the government changes its incentive schemes.

Baird doesn’t expect SolarCity to turn profitable in the next few years. The San Mateo-based company will be spending heavily on sales and marketing to expand its MW portfolio. The real value for SolarCity Corp (NASDAQ:SCTY) lies in how strong its business would be after 2017 when the government reduces the ITC. When the tax environment gets less favorable, the company could scale down its sales & marketing efforts, and focus on collecting the recurring revenues from its leased systems.

SolarCity Corp (NASDAQ:SCTY) shares fell 1.92% to $52.57 at 11:44 AM EDT on Friday.