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First Solar ( FSLR ) and SunPower ( SPWR ) stocks flashed Wednesday after a Guggenheim analyst said rival SunEdison ‘s ( SUNE ) “collapse” wouldn’t torch the duo and their yieldco 8point3 Energy Partners ( CAFD ). Just ahead of the closing bell on the stock market today , SunPower stock was up about 3%, leading First Solar stock which was up about 2%. Shares of 8point3 Energy Partners trailed, up 0.5%, ahead of beleaguered SunEdison stock, down about 7% and trading below 40 cents. Broadly, solar stocks lit up Wednesday. IBD’s 21-company Energy-Solar industry group was up 2% in late-afternoon trading. SunEdison stock has plunged 99% since its 2015 high on July 20, when it announced its plan to acquire Vivint Solar. Residential installer Vivint Solar scrapped the sale in December, citing SunEd’s lagging financials. Last month, SunEdison’s yieldco TerraForm Global ( GLBL ) distanced itself from massive project developer SunEd, which could be headed for a bankruptcy protection filing soon , according to reports. SunEdison may be in technical default on $725 million in second-tier loans unless it negotiated extensions with creditors. ITC Extension A Boon But First Solar and SunPower won’t feel that heat, Guggenheim analyst Sophie Karp wrote in a research report. Karp initiated coverage on First Solar stock with a buy rating, ahead of SunPower and 8point3 Energy Partners stocks, which have neutral ratings. Congress’ extension to the key Investment Tax Credit (ITC), which underpins the U.S. solar industry, will prove a boon for large-scale developers like First Solar and SunPower, she wrote. Residential installers like SolarCity ( SCTY ) and Sunrun ( RUN ) won’t see the same benefits. “We do not think that residential developers will be main beneficiaries due to the fiercely competitive nature of their business,” she wrote. “Despite operating in a fragmented and competitive market (large-scale developers) are still much better protected and will be able to retain more benefits.” But SunPower might be too internationally stretched to reap the ITC extension benefits as fully as First Solar, Karp wrote. Prepping for the expected expiration Dec. 31, 2016, SunPower invested heavily in international expansion. “Given that the ITC extension has changed the calculus domestically, we wonder if SunPower is now too thinly stretched to take advantage of this backdrop,” Karp wrote. Her price target on SunPower stock is a 21. She lists First Solar stock with a 77 price target. SunEdison’s collapse will likely lead First Solar and SunPower to bring their financing back to basics, Karp wrote. Project financing will be available to reputable players at attractive rates, but yieldcos will likely continue to be shut out of the market. Meanwhile, tech innovations are driving solar costs down and storage is on the horizon, Karp wrote. Storage is often seen as a pie-in-the-sky innovation to cut solar customers’ reliance on utilities at night and on cloudy days. Scalper1 News
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