SolarCity (SCTY) Stock Down, Credit Suisse Cuts Rating
NEW YORK (TheStreet) -- Shares of SolarCity (SCTY) are down 1.25% to $23.63 in early afternoon morning trading as the company's rating was cut earlier today to "neutral" from "outperform" at Credit Suisse.
Additionally, the firm downgraded the company stock's price target to $27 from $38.
This comes after Tesla Motors (TSLA) - Get Report made an offer to buy the San Mateo-based solar-power company for $2.8 billion last week.
Credit Suisse analyst Patrick Jobin believes SolarCity is worth closer to $3.7 billion, but believes the proposed deal has a 60%-70% chance of closing with little to no chances in terms, according to an analyst note.
If the deal passes, a portion of investors are concerned about Tesla absorbing SolarCity's $3.25 billion debt, with $1.23 billion due by the end of 2017.
Separately, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. TheStreet Ratings has this to say about the recommendation:
We rate SOLARCITY CORP as a Sell with a ratings score of D. This is driven by multiple weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its generally high debt management risk, poor profit margins, weak operating cash flow, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.
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