Here's a Reason Why SolarCity (SCTY) Stock Is Rallying Today
SolarCity shares are jumping on some bullish analyst comments, TheStreet TV anchor Rhonda Schaffler reports in the above video.
NEW YORK (TheStreet) -- SolarCity (SCTY) stock is soaring by 10.49% to $19.69 on heavy trading volume this afternoon, as some analysts remain bullish despite the renewable energy company's disappointing 2016 first quarter financial results.
Shares of SolarCity plunged by 21% on Tuesday after the company reported a wider-than-anticipated first quarter loss, forecast a deeper-than-expected second quarter loss and cut its installation estimates after Monday's market close.
SolarCity consequently received ratings downgrades to "neutral" from "buy at Merrill Lynch and to "market perform" from "outperform" at Avondale Partners, but bulls stand by the stock given its valuation.
Deutsche Bank reiterated its "buy" rating and $49 price target on the stock, noting that "at current valuations, assuming relatively conservative installation forecasts, the shares are discounting no value for the devco," Barron's reports.
Credit Suisse similarly reiterated its "outperform" rating on the stock, but slashed its price target to $38 from $62.
"SolarCity seems to be faced with re-proving the merits of their business model each quarter - facing either operational, regulatory, capital, or competitive challenges - in addition to painfully, yet gradually, transitioning the strategy more towards value than growth, causing significant ownership rotation," the firm explained, according to Barron's.
Separately, TheStreet Ratings team rates the stock as a "sell" with a ratings score of D.
SolarCity's weaknesses include 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.
You can view the full analysis from the report here: SCTY
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 article's author.
