SolarCity Corp (NASDAQ:SCTY) posted solid earnings this week, but they weren’t enough to wow Wall Street. The report triggered a sell-off, some analyst estimate revisions and at least a couple of price target cuts.
Goldman Sachs and Raymond James analysts both reduced their price targets for SolarCity and adjusted their estimates for the company after this week’s earnings report.
David Einhorn's Greenlight Capital funds were up 11.9% for 2021, compared to the S&P 500's 28.7% return. Since its inception in May 1996, Greenlight has returned 1,882.6% cumulatively and 12.3% net on an annualized basis. Q4 2021 hedge fund letters, conferences and more The fund was up 18.6% for the fourth quarter, with almost all Read More
SolarCity executes “well”
In his report dated Nov. 6, 2014, Raymond James analyst Pavel Molchanov reiterated his Outperform rating on SolarCity and cut his price target from $70 to $75 per share. The analyst said that any price target he would assign to the solar panel installer would be “somewhat arbitrary” and that assigning a price target is “always more of an art than a science” when it comes to SolarCity.
Molchanov thinks the company’s most important move strategically so far this year was its entry into loans through the rollout of the MyPower loans. He notes that the company has previously been focused on leases and power purchase agreements, which make up about two-thirds of the residential solar market. However, he said some customers would rather own their own solar panel system, so offering loans gives them the choice to do that.
He adjusted his estimates for SolarCity, lowering his December quarter estimate from a loss of $1.12 per share to a loss of $1.19 per share. He slightly increased his estimate for the full year from a loss of $3.95 per share to a loss of $3.67 per share. In addition, he raised his revenue estimate from $254 million to $258 million.
SolarCity ‘s growth comes up a bit short
In their report also dated Nov. 6, 2014, Goldman Sachs analysts Brian Lee and Hank Elder reiterated their inclusion of SolarCity on their Buy rating but bumped their price target down from $90 to $88 per share. They note that SolarCity did set a new record for bookings at 230 megawatts, but they think bulls were looking for a number closer to 250 megawatts.
They add that SolarCity disappointed slightly on retained value, which was $1.72 per watt, compared to the $1.75 per watt target and the second quarter’s retained value of around $2 per watt. However, the Goldman Sachs team thinks this was a “healthy reset” in expectations that also removes a recent overhang on SolarCity.
They also made some adjustments to their estimates for SolarCity. Their full year 2014 estimate moves from losses of $4.14 per share to losses of $3.79 per share, while their 2015 estimate moves from $3.34 per share in losses to $4.32 per share in losses. Their 2016 estimate was cut from a loss of $1.14 per share to a loss of $2.95 per share.