On Oct 15, Zacks Investment Research upgraded SunEdison, Inc. (SUNE) to a Zacks Rank #1 (Strong Buy). Notably, SunEdison’s shares are up 6.3% year to date representing a solid return of 58.9% over the past one year. These make the company an attractive investment opportunity. Last quarter, SunEdison posted a positive earnings surprise of 33.3%.
The upgrade came on the back of SunEdison’s growing exposure to the solar energy market and its decision to lineup a second yield co. from an Initial Public Offering
The new yield co. will own a portfolio in Asia and Africa. Also, SunEdison completed its "yield co" unit TerraForm Power Inc.’s IPO. The amount generated from the proposed offering, will primarily be used for the development of its solar farms and general corporate purposes. We believe that these strategies should enable SunEdison to reduce its debt level and help it emerge as a pure-play solar project developer.
Management has also increased its annual megawatt (MW) completion target at a compound annual growth rate (CAGR) of more than 95% (FY09–FY14). In the second of 2014, SunEdison completed 218MW and targets completing 1000 to 1150 MW in 2014 (up from the previous target of 900 to 1150 MW). Moreover, the company expects to complete more than 2000 MW in 2016.
SunEdison’s expansion in India, where it is developing two solar projects with a capacity of 241 kilowatts (kW) and 159 kW in collaboration with the central and state government agencies also remains an encouraging factor. Recently, Google (GOOGL) invested approximately $145 million in SunEdison through equity funding.
Also, SunEdison swung to profit in the second-quarter of 2014. Revenues also compared favorably on a year-over-year basis (up 61%) and came in at $646.2 million. The year-over-year increase in revenues was aided by higher solar project sales (up 36.3% year over year).
Over the last 30 days, SunEdison’s Zacks Consensus Estimate remained unchanged at a loss of 24 cents and a loss of 60 cents for the current quarter and fiscal 2014, respectively.
Nonetheless, the pricing environment and competition from SunPower Corp. (SPWR) and First Solar Inc. (FSLR) remain headwinds. Additionally, project development requires considerable time and investments. Hence, any delay or inability to sell these projects at desired prices could impact liquidity.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
To read this article on Zacks.com click here.
Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.
Be the first to comment