Energy

Are Analysts Lowering SunEdison Targets Enough?

solar energy
Thinkstock
Earlier this week, solar energy provider SunEdison Inc. (NYSE: SUNE) hosted a conference call to layout its plans for the rest of 2015 and all of 2016. The call appears to have achieved its objective: since closing last Friday at $8.27, shares have climbed back to close at $9.72 on Wednesday, after touching a high above $10. In late June, the stock touched a recent high over $32 a share.

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.

ALSO READ: What to Expect From Major Energy Companies This Earnings Season

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.

ALSO READ: 3 Top Jefferies Hidden Value Stocks to Buy Now

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.

Is Your Money Earning the Best Possible Rate? (Sponsor)

Let’s face it: If your money is just sitting in a checking account, you’re losing value every single day. With most checking accounts offering little to no interest, the cash you worked so hard to save is gradually being eroded by inflation.

However, by moving that money into a high-yield savings account, you can put your cash to work, growing steadily with little to no effort on your part. In just a few clicks, you can set up a high-yield savings account and start earning interest immediately.

There are plenty of reputable banks and online platforms that offer competitive rates, and many of them come with zero fees and no minimum balance requirements. Click here to see if you’re earning the best possible rate on your money!

Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.