Raymond James Cuts Price Target as SolarCity (SCTY) Cuts Installation Guidance

Raymond James maintained a Strong Buy rating on SolarCity (NASDAQ: SCTY), and cut the price target to $50.00 (from $60.00), following the company's 1Q earnings report. Periodic billings revenue of $84.2 million topped estimates of $80.6 million, plus there was upfront system and incentives revenue of $38.4 million. The start to 2016 bookings was slow, largely a function of the regulatory uncertainty in Massachusetts and New York. The prior full-year target of 1,250 MW is being reduced to a range of 1,000-1,100 MW.

Analyst Pavel Molchanov commented, "In February, after a 4Q headline miss amid an unforgiving market, SCTY shares briefly traded below net present value – prompting our upgrade to Strong Buy. Hyperchoppy investor sentiment – across the entire solar space, but especially SolarCity – has been non-stop since then, reflecting some substantive issues (e.g., net metering policy news) but also extraneous events such as the SunEdison bankruptcy. While 1Q results were solid, the haircut in full-year MW guidance is disappointing, hence the stock’s fall back below NPV. More consistent execution (read: no more cuts!) is essential to achieve multiple expansion. Still, the big picture remains intact: SolarCity's dominant position as the largest player in U.S. residential solar, and its pioneering role in financing innovations, provide leverage to a major long-term theme in clean tech: the inexorable rise of distributed generation. While being cognizant of the valuation complexity and regulatory risks, we reiterate our Strong Buy rating."

For an analyst ratings summary and ratings history on SolarCity click here. For more ratings news on SolarCity click here.

Shares of SolarCity closed at $22.51 yesterday.

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