TerraForm Power (TERP) Stock Plummets on SunEdison Downgrade
NEW YORK (TheStreet) --TerraFormPower (TERP) - Get Report stock is plunging 14.89% to $7.51 on heavy volume Wednesday after SunEdison's (SUNE) stock rating was downgraded at UBS Research.
TerraForm Power, a clean power company, is operated as a yieldco by SunEdison.
Citing recent management shakeups, UBS downgraded SunEdison from "sell" to "neutral." Additionally, Citigroup said it was reviewing its price target and recommendation, Barrons.com reports.
Earlier this week, Brian Wuebbels, the current CFO and executive vice president of SunEdison, was named CEO of TerraForm Power, effective immediately. The company also named a new CFO and three new board of directors members.
"This management change, and the reshuffling of the board of directors, undermines our previous view that Terraform Global would be able to operate largely independently - and at this juncture we do not see it as a positive development," Citi said in an analyst note, according to Barrons.com.
So far today, 11.12 million shares of TerraForm Power have traded, vs. its 30-day average of 4.21 million shares.
Separately, TheStreet Ratings team rates TERRAFORM POWER INC as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
We rate TERRAFORM POWER INC (TERP) a SELL. 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 deteriorating net income and generally high debt management risk.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Independent Power Producers & Energy Traders industry. The net income has significantly decreased by 286.6% when compared to the same quarter one year ago, falling from $1.91 million to -$3.56 million.
- The debt-to-equity ratio is very high at 2.09 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Despite the company's weak debt-to-equity ratio, the company has managed to keep a very strong quick ratio of 3.09, which shows the ability to cover short-term cash needs.
- Compared to other companies in the Independent Power Producers & Energy Traders industry and the overall market, TERRAFORM POWER INC's return on equity significantly trails that of both the industry average and the S&P 500.
- TERP's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 71.17%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter.
- The gross profit margin for TERRAFORM POWER INC is currently very high, coming in at 72.93%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of -2.18% is in-line with the industry average.
- You can view the full analysis from the report here: TERP
Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.