SolarCity Corp (SCTY) To Keep Trading At A Discount

SolarCity shares fell more than 4% on Monday, largely due to the failure of another Elon Musk project. On Sunday, a SpaceX rocket exploded minutes after take-off en route to the International Space Station (ISS). Meanwhile, Needham & Company analysts Edwin Mok and Kimberly Donovan hosted a meeting with SolarCity’s VP of investor relations, Aaron Chew, and the newly appointed SVP of business development, Radford Small.

Needham maintains ‘Hold’ rating on SolarCity

Analysts said they came out “incrementally more positive” on SolarCity’s cost advantages and its competitive position in the U.S. residential solar market. Needham & Company said the residential solar installer is trading well below its fair value. Analysts see the discount as more structural. Needham maintained its Hold rating on the stock.

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The research firm said SolarCity would continue to trade below its fair value due to many longer-term risks, until a more tangible catalyst emerges. Though Mok and Donovan still see the risk for lower pricing coming from loan-based offerings, they believe the San Mateo-based company is better positioned in 2017 and beyond. The federal Investment Tax Credit (ITC) is scheduled to expire after 2017.

SolarCity starts offering energy storage


While SolarCity is the biggest residential solar installer in the United States, analysts believe its growth will be driven by energy storage and international expansion. Late last month, Goldman Sachs said that SolarCity remained one of its top clean energy picks. On Monday, SolarCity announced a special fixed-rate solar power offering for homebuilders and their buyers in California, and energy storage for new homes.

The company’s new fixed solar rates program will provide solar energy at no upfront cost to the homebuilder or buyer. SolarCity also allows new homebuyers that are customers of major utilities in California to lock in a fixed solar rate for 20 years. This fixed rate is at the lowest standard, tier-1 rate that utilities offer at signing.

The San Mateo-based company has also started taking orders for solar and home energy storage systems. The storage service includes the Tesla Powerwall battery pack.

SolarCity shares fell 0.49% to $53.04 at 10:20 AM EDT on Tuesday.