Bank Of America's Stern Sunedison Warning

• The share price of Sunedison Inc SUNE has plunged 93.38 percent over the past year, almost touching its 52-week low on February 12 at $1.41.
• Krish Sankar of Bank of America Merrill Lynch has downgraded the rating on the company from Buy to Neutral, while lowering the price target from $10.00 to $2.50.
• Sankar has moved to the sidelines due to expectations of legal and financial issues continuing to lead to volatility in the stock.

Analyst Krish Sankar expressed concerns regarding Sunedison’s access to financing, legal issues associated with the Vivint Solar Inc VSLR and Latin America Power (LAP) transactions, as well as execution challenges.

Related Link: SunEdison Leads Short Interest Trend In Solar Stocks

Although Bank of America’s liquidity analysis suggests that the company should have cash on its balance sheet to operate, Sankar mentioned that “management’s ability to execute on OpEx reductions to maintain margins, recycle assets through its warehouse facilities and sell projects to third parties, as well as the outcome in the Vivint Solar lawsuit” could pose risks.

In addition, the LAP processing could impact Sunedison’s ability to continue to sell its assets to its warehouse partners.

“We also note that SunEdison is basically a forced-seller into the third party market at this point, which could make it difficult to realize full value for its assets despite our view of that market’s size and robustness,” Sankar added.