SolarCity Corp. (SCTY), the owner of rooftop solar plants led by billionaire Elon Musk, climbed the most in three weeks after analysts at Credit Suisse Group AG upgraded shares and almost doubled their 12-month price target.
SolarCity rose 6.6 percent to $36.29 at the close in New York, the most since May 20. The San Mateo, California-based company’s shares began trading Dec. 13 at $8.
Demand for rooftop power systems in California, the largest solar market, will grow, buoyed by support from state regulators and officials, according to Credit Suisse analysts Satya Kumar, Brandon Heiken and Patrick Jobin. Governor Jerry Brown has set a goal of 12 gigawatts of so-called distributed generation by 2020, up from about 1.7 gigawatts today.
Brown “has been a strong proponent of distributed generation, countering utilities’ opposition,” the analysts said in a research note today. They raised their rating to the equivalent of buy and increased SolarCity’s 12-month price target to $52 from $28.
Distributed-generation systems typically aren’t owned by utilities and produce power close to where it’s consumed by homeowners and businesses. Utilities are required under state regulations to purchase at retail rates any surplus electricity that’s shipped to the grid. The regulation, known as net metering, has a 5 gigawatt cap and may expire in 2015.
“We are more comfortable that the CPUC and California governor will continue to support distributed solar generation even if the net metering cap is not raised by 2015,” the analysts said. The California Public Utilities Commission is appointed by Brown.
Billionaire Musk, 41, is SolarCity’s chairman and largest shareholder with about 28 percent. He is also chief executive officer of Tesla Motors Inc. (TSLA), the electric car company that’s more than doubled in value this year. SolarCity CEO Lyndon Rive, Musk’s cousin, holds about 3.5 percent of his company.
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