Solar Investors: Judgement Day Has Arrived In California

Roth Capital Partners analyst Philip Shen sees a major positive catalyst ahead for SolarCity Corp SCTY. However, now that judgement day has arrived for SolarCity in California, not everyone is as bullish as Shen, including Axiom analyst Gordon Johnson.

In a pair of new reports, these two analysts discuss why the near-term fate of SolarCity’s stock rests in the hands of the California Public Utilities Commission (CPUC) and their differing opinions on the risk/reward balance ahead of the decision.

The CPUC is expected to rule as soon as today on Net Energy Metering (NEM) in California. According to Shen, the status quo would likely provide a big boost for SolarCity.

“If the NEM policy is finalized, we would expect the stock to react positively, assuming there is not much change from the original Proposed Decision,” he explains.

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However, Johnson is more concerned about the potential impact of a ruling in favor of utilities.

“Although we admittedly do not know what direction the CPUC is likely to vote, we can conclude that any concessions in favor of the utilities would be a neg. for rooftop solar vendors and… could very well set off a domino effect across the country,” he warns.

Roth has a Buy rating on SolarCity and a $65 price target, while Axiom has Sell ratings on SolarCity, Trina Solar Limited (ADR) TSL and Yingli Green Energy Holding Co Ltd (ADR) YGE.

The CPUC is expected to meet today at 12:30pm EDT to vote on a NEM decision.

Disclosure: the author holds no position in the stocks mentioned.