The Upside for SCTY Stock
Not everyone thinks SolarCity Corp (NASDAQ:SCTY) belongs in the garbage heap. There are analysts—from a major bank no less—who think SCTY stock should be far above its current $28.00. They think the share price should be closer to $64.00.
That’s a bold price target considering the run SolarCity has had. In the last 12 months, the company lost half of its market value, falling from $55.84 to $27.94 per share. It was a bloodbath that cost the company a lot of credibility.
But Deutsche Bank is now taking a stand against the bears. In a recent report, analyst Vishal Shah laid out a strong bullish case for SCTY stock. His price target proposes a 128% gain in the company’s share price. (Source: “Deutsche Bank Says SolarCity Fears ‘Overblown,’ Projects $64 Share Price,” Benzinga, February 8, 2016.)
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Which Major Bank Is Bullish on SolarCity?
Shah took on the criticisms of SolarCity one at a time, starting with the regulatory outlook. Much of the early pessimism was due to fears of a key tax break expiring in 2017. This tax break made rooftop solar panels affordable to the average homeowner.
It was pivotal to the industry’s growth period, so investors naturally worried about its extension. And yet that moment passed. Congress (somehow) managed to ensure the tax credit lived on for another five years.
It gave solar energy enthusiasts something to cheer for but more importantly, it lifted SolarCity stock past $57.00. Then the company chose to leave Nevada after it lost an important ruling on “net metering” didn’t go its way.
The bears rushed in on SolarCity once again, but Shah thinks SolarCity can still meet its installation targets. He also shot down a line of attack on the company’s funding.
“The company can access a number of other options besides the ABS markets where the costs maybe [sic] high but capital is still available,” he said. “SCTY has sufficient access to tax equity markets and can sell operating assets to achieve growth objectives.”
If Shah’s analysis is correct, then SolarCity stock is set for a 128% surge.