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SolarCity Corp (SCTY) Targets Low-Income Households; Analysts See 52% Upside

Solar City (SCTY)

SolarCity Corp has been facing headwinds lately and the larger than life image of Elon Musk has not been able to arrest the decline in the stock. SolarCity’s woes were compounded when long-time bear, Jim Chanos revealed that he has a short position in the stock. SolarCity’s CEO replied the short remarks with fundamentals that show that the firm has a rock solid outlook but many investors were not convinced.

Solar City

In the last four weeks, the stock has dropped by 13.9% and it has lost as much as 14.06% in the last one week. However, the firm seems resolute to show that it is fundamentally sound as opposed to the negative views aired by Jim Chanos. Utility Dive reports that SolarCity has launched a new service that targets low-income housing developments in a move that will increase its customer base, from which the firm can expect revenues in the medium to long terms.

SolarCity targets low-income housing clients

The new service that SolarCity is meant for developers, builders, and residents in low-income housing developments. The firm says the service will allow these low-income clients pay less for solar power than what they are paying for utility power now. The firm said it will finance and install the solar power system on rooftops and carports of low-income clients and that the clients would in turn receive credits on their utility bills.

Susan Eggman, a Californian Assembly Member was quoted saying. “SolarCity should be commended for creating dedicated programs that target the hard to reach consumers while putting hard earned money back into the pockets of those who need it the most.” SolarCity will also benefit from the deal because the deal would increase its install base. SolarCity is already ramping up hiring at its Buffalo. N.Y. factory as it intends to increase the workforce from 450 to 1,460 – a clear sign that the firm has huge orders on the horizon

Stifel initiates SCTY coverage with a BUY rating

Analysts at Stifel have initiated coverage on SolarCity with a “Buy” rating and they have a $64 price target on the stock within the next one year. Sven Eenmaa, research analyst at Stifel observed that SolarCity controls 34% of the total market share for solar power in the U.S. He believes that the firm still has room for growth in the solar power market.

The analyst notes that SolarCity has less than 1% entry into the residential single family homes and that it has less than 1% entry in the 5.6 million commercial buildings. In addition, the firm is working out a way to reduce the cost of its solar panels by as much as $2.50 per watt levels by the end of 2017; hence, the firm should be able to record improved margins in the medium term.

 

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Victor Alagbe is a seasoned business and finance writer with a specialty in writing about how to invest for the long-term in healthcare, pharmacology, energy and tech stocks. His long-term focus is on stocks that provide a nice mix of growth and income. For the short term, he passionately writes about trading stock options for the excitement and leverage that stock options offer.