Cowen Boosts PT on SunEdison (SUNE) to $29; Sum-of-the-Parts Could Provide Additional Upside

Cowen and Company boosts its price target on Outperform-rated SunEdison (NYSE: SUNE) from $24 to $29 following Q3 results.

Analyst Jeffrey Osborne offered the following commentary:

YieldCo Ramping Nicely; Emerging Markets YieldCo Next

Terraform is in a strong position to create additional value given SunEdison's increased rate of retained systems and growing pipeline and backlog. Management offered additional color on the IDR process and is currently calling for the first trigger, the impetus of the IDR payout mechanic, to occur in 2016, with the final tripper point being reached by mid-2018. After crossing the final threshold, which triggers a 50% IDR payout, each incremental distributed dollar would translated into $0.82 for SunEdison. We view these estimates to be on the conservative side given the pace of retained project. Importantly, we believe that the increased project retention rate to also be reflective of the announcement of an emerging markets YieldCo, which will likely require a drop down of between 400 and 600 MW and is slated to launch in the middle of next year.

Sum-of-the-Parts Continues to Highlight Compelling Potential Valuation Upside

We see around a $2.25 per share of value for the semiconductor business with another $0.75 coming from the solar materials businesses. The polysilicon JV with Samsung represents an additional ~$0.50 of value while the lion's share of value contribution comes from the solar projects, which is appropriately $14 a share. The addition of SunEdison's 64% ownership of TerraForm creates ~$7 of value. Lastly, we conservatively estimate the present value of Sun's Terraform IDRs to unlock around $4.50 of value. Cumulatively, this amounts to a sum-of-the-parts valuation of ~$29 of equity value per share.

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

SunEdison closed at $18.37 yesterday.

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