Why SunEdison Inc. Shares Popped Today

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

What: Shares of SunEdison  (NYSE: SUNE  ) jumped more than 11% Monday following an analyst upgrade.

So what: Citing valuation upside potential from the successful execution of  the renewable-energy specialist's yieldco strategy, Deutsche Bank analyst Vishal Shah upgraded shares of SunEdison from hold to buy. Shah simultaneously increased his per-share price target for SunEdison from $13 to $35, representing a more than 60% premium for investors even after today's pop. Shah also expects "the emergence of 5-6 publicly traded yieldcos over the next 12-18 months to act as a robust growth enabler" for the solar sector as a whole.

Now what: SunEdison shares rose just over two weeks ago after the company announced the proposed initial public offering of its indirect yieldco subsidiary, TerraForm Power. As a yieldco, TerraForm generates revenue from long-term power purchase agreements with utility companies, and gives businesses like SunEdison a place to sell their solar installations.

SunEdison isn't profitable on a trailing 12-month basis, and shares don't exactly look cheap trading around 166 times next year's expected earnings. But that's also not uncommon for a company on the cusp of achieving sustained profitability. If SunEdison continues moving in the right direction, as expected, I see no reason the stock can't also continue rewarding patient long-term investors.

Do you know this energy tax "loophole"?
If you're interested in the solar sector, you might already know record oil and natural gas production is also currently changing the lives of millions of Americans. But what you probably haven't heard is that the IRS is encouraging investors to support our growing energy renaissance, offering you a tax loophole to invest in some of America's greatest energy companies. Take advantage of this profitable opportunity by grabbing your brand-new special report, "The IRS Is Daring You to Make This Investment Now!," and you'll learn about the simple strategy to take advantage of a little-known IRS rule. Don't miss out on advice that could help you cut taxes for decades to come. Click here to learn more.


Read/Post Comments (0) | 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.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2996316, ~/Articles/ArticleHandler.aspx, 11/25/2014 5:10:53 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement