SolarCity Corp (NASDAQ:SCTY) shares have declined more than 19% in the last 30 days. In fact, almost all solar stocks are down in the past month. But this sell-off provides a buying opportunity, according to Goldman Sachs analysts Brian Lee and Hank Elder. Continued evolution of the rooftop solar and recent data points indicate that market share consolidation continues to gather momentum. The top two residential solar installers captured more than 50% of the market in the second-quarter of this year.
Solar stocks go up around the SPI event
What are the two near-term catalysts for SolarCity stock? According to Goldman Sachs, they are the Solar Power International (SPI) event and the company’s Q3 earnings. SPI is the largest annual trade show of the U.S. solar industry, and it begins today. Historically, the event has been an impactful and positive catalyst for solar stocks.
In the past two years, the U.S. have jumped 15% on average around the event. Given the recent decline in solar stocks, analysts expect to see a similar upside potential this year. At the event, fresh rounds of data points are expected to show strong 2H2014 solar demand, in the U.S. as well as China. Further, new offerings such as solar loans are gaining momentum. Recently, SolarCity announced its MySolar loan platform and new solar bonds for individual investors.
SolarCity’s lease revenue expected to jump 128%
The San Mateo-based company is expected to release its third-quarter results early next month. Goldman Sachs calls for $64 million in revenue and $1.11 per share in losses, in line with the consensus estimate of $60 million revenue and $1.11 per share in Q3 losses. The research firm expects operating lease revenue to jump 128% YoY to $57 million. Systems sales are expected to come in at $7 million.
Goldman Sachs forecasts gross margins of 45%, which includes 50% margin for lease. Operating expenses are expected to come in at $119 million. The research firm expects SolarCity to install 145MW of panels in the current quarter. The company is expected to report Q3 bookings of 235-250MW.
SolarCity shares jumped 3.18% to $53.15 at 11:53 AM EDT on Monday.