"We believe investors are largely discounting the potential upside resulting from lower financing costs, grid parity beyond 2016, improving technology/[bill of substance] costs and potential scale benefits driving share gains over time," writes Deutsche's Vishal Shah, reiterating a Buy and $90 PT for SolarCity (SCTY +3.2%).
Shah considers recent worries about regulation, tougher competition, and weakening profitability overblown, and thinks SolarCity's retained profit/share will continue seeing a 45% CAGR through 2016.
His note comes after SolarCity priced $70.2M worth of solar asset-backed notes due April 2022 at a fairly low interest rate of 4.59%.
Roth (Neutral) sees the sale as another positive step towards lowering SolarCity's financing costs. "By varying important variables, such as the advance rate, maturity, and underlying asset profiles, we believe SCTY is attempting to gain an understanding of demand for its ABS product."