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Why SolarCity Corp. Is Ready to Rebound

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While Fools should generally take the opinion of Wall Street with a grain of salt, it's not a bad idea to take a look at particularly stock-shaking analyst upgrades and downgrades -- just in case their reasoning behind the call makes sense.

What: Shares of SolarCity  (NASDAQ: SCTY  ) climbed 2% in pre-market trading Thursday after Baird upgraded the solar energy systems company from neutral to outperform.

So what: Along with the upgrade, analyst Ben Kallo planted a price target of $75 on the stock, representing about 34% worth of upside to yesterday's close. So while momentum traders might be turned off by SolarCity's particularly sharp pullback over the past month, Kallo's call could reflect a growing sense on Wall Street that the company's prospects are now too cheap to pass up.

Now what: According to Baird, SolarCity's risk/reward trade-off is particularly attractive at this point. "SCTY's cost reductions and scale continue to strengthen its position in the market," said Kallo. "Additionally, innovative financing products, such as solar ABS', provide relatively low-cost capital for SCTY to capitalize on the expansive U.S. greenfield opportunity." When you couple those seemingly strong tailwinds with its recent price weakness, SolarCity might provide long-term growth investors with a rather intriguing opportunity. 

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Read/Post Comments (10) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On April 17, 2014, at 11:58 AM, mookysmoo wrote:

    Why isn't this article posted under SCTY page on yahoo finance?

  • Report this Comment On April 17, 2014, at 1:27 PM, oTeslaManiax wrote:

    While I think SCTY has huge potential, the big boys gotta have a heart. They are ripping this stock up into shreds in huge swings. The whole thing is not in the proper control of real investors. I like to see Solarcity succeed, but if these games continue it makes it difficult for them to finance their operation. I think the utilities and solar companies will cooperate to make things work. The innocent investors are getting hurt, and in the end you need them more than you think for the stock and the company to work. Please bring back the trust a little will you... we all can live in a happy solar world...

  • Report this Comment On April 17, 2014, at 2:54 PM, ronwiserinvestor wrote:

    Here's a cup of reality for you koolaid sipping solar lease company minions: The solar leasing companies owe much, if not most of their success to the fact that they were first to market with a $0 down financing (lease) product during a time when virtually no solar financing model of any kind was available.

    That all recently changed when $0 down FHA and $0 down PACE financing, both with tax deductible interest payments hit the scene. (solar leases and PPAs do not offer tax deductible interest).

    Now that both of these no money out of pocket solar financing options as well as others such as $0 down LightStream, $0 down Comerica Bank financing and $0 down Mosaic financing are available for residential solar projects, smaller players as well as even tiny Mom & Pop dealers across the country are not only able to compete, but even offer much lower pricing on high quality products than the pricing that is offered by SolarCity as well as other major players.

    As of last quarter, the growth in market share for solar leases and PPAs has fallen flat. More and more consumers are opting to keep the 30% federal tax credit and applicable cash rebates for themselves while taking advantage of tax deductible interest payments and owning their much lower priced, virtually maintenance free solar system for a much greater return on investment than any lease or PPA.

    The reign of the solar lease and PPA is about to end and $0 down solar loans with their tax deductible interest payments coupled with sub $3.00 per watt before incentives pricing will win the war against the utilities, not the leasing companies.

  • Report this Comment On April 17, 2014, at 3:03 PM, ronwiserinvestor wrote:

    Do you think that maybe it's all the class action lawsuit announcements against S.C that's causing the huge swings?

  • Report this Comment On April 17, 2014, at 3:33 PM, oTeslaManiax wrote:


    You got to go advertise your business with some online ads.

  • Report this Comment On April 17, 2014, at 4:21 PM, ronwiserinvestor wrote:


    Are you beginning to hallucinate from drinking too much of that solar lease koolaid ?

    I never mentioned my business in any of the above posts. Or is it that you're that you're from some commie country that prohibits the expression of one's opinion.

    If that's the case, this is America, where people are encouraged to voice their opinions. Go back to where you came from and take your tesla with you, fool!

  • Report this Comment On April 17, 2014, at 4:52 PM, oTeslaManiax wrote:

    I think people know the differences from a lease or buy option. You obviously want to troll every single article about Solarcity. Yes, in America people like to have choices. Everyone heard your opinion a few thousand times of your cut and paste comments. Thanks for reminding me... I will go get myself a glass of kool-aid...

  • Report this Comment On April 17, 2014, at 4:59 PM, ronwiserinvestor wrote:

    A troll? that's funny, I was just thinking the very same thing about you. Please do enjoy your kool-aid!

  • Report this Comment On April 18, 2014, at 2:40 AM, Zendwell wrote:

    He's right Ron. You troll hard.

  • Report this Comment On April 18, 2014, at 3:01 PM, ronwiserinvestor wrote:

    Yes, thanks for the compliment!

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Brian Pacampara

I take a look at big 10% moves, as well as stock-shaking analyst calls, on a daily basis for The Fool. While I don't believe in active trading, closely monitoring Mr. Market's mood swings can help identify long-term opportunities.

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8/28/2015 3:19 PM
SCTY $47.79 Up +1.56 +3.36%
SolarCity CAPS Rating: ****