Are Analysts Lowering SunEdison Targets Enough?

Since then, two acquisitions valued at around $4.2 billion and no clear plan going forward were too much for the investors simply to wave away. Analysts’ reactions to SunEdison’s conference call were mostly positive and we’ll take a little closer look now.

Analysts at Janney reduced their price target on the stock from $23 to $20, but maintained the firm’s Buy rating. SunEdison expects to improve its cash position from an ending total of $902 million in the second quarter to $1.38 billion at the end of the third quarter. Janney noted:

This is one of the first times the company has taken a more conservative posture, de-emphasizing growth at any cost and pivoting to more third-party sales to bolster liquidity and react to temporary dislocations impacting the YieldCo fundraising machine.

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The company received a margin call on its term loan and had to make a $152 million call payment, which the company will get back when it repays the loan in full. Here’s what Janney’s analysts had to say about SunEdison’s forward guidance:

Changing Up the “Mix.” Key items (and forecast model) changes include the following: total [operating expense] drops from $0.22 to $0.17 per MW; total 2016 completed MW’s drops to [a range of] 3,300 to 3,700 (from [a prior range of] 4,200 to 4,500); 2016 retained MW’s increases (to [a range of] 2,500 to 2,700, versus prior expectations of 1,840 – 2,000); third party sales guidance increases to 800 MW – 1,000 MW, from 260 MW to 300 MW.

Credit Suisse’s analysts maintained their Outperform rating but lowered their price target on SunEdison stock from $35 to $25 per share, “to reflect lower volumes and market conditions of the YieldCo vehicles.” The analysts revised earnings estimates for 2015 through 2017 from per-share net losses of $3.16, $2.28 and $2.72, respectively, to a 2015 loss of $3.24, a 2016 loss of $1.70 and a 2017 loss of $2.28.

The Credit Suisse analysts also noted that SunEdison “is not guiding to any dropdowns” to yieldcos TerraForm Power Inc. (NASDAQ: TERP) or TerraForm Global Inc. (NASDAQ: GLBL), which relieves pressure on the yieldcos.

Analysts at Bank of America Merrill Lynch reiterated their Buy rating and price target of $18, while Needham’s analysts cut the price target from $26 to $18 and maintained their Buy rating.

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S&P Capital IQ cut its price target from $32 to $18, but maintained a Strong Buy rating on the stock.

SunEdison’s stock is giving back some of this week’s gain, trading in the noon hour on Thursday at $9.07, down more than 6% for the day. The stock’s 52-week range is $6.56 to $33.45.