Vivint Soars as Upgrade Cites Strong Solar Rooftop Demand

  • Shares are trading at discount to value of assets, Shah says
  • Vivint canceled deal in March to be acquired by SunEdison

Vivint Solar Inc., the residential solar developer that canceled a deal to be bought by clean-energy giant SunEdison Inc., gained the most in 10 months after a Deutsche Bank AG analyst said the shares are undervalued and raised his price target.

Vivint climbed 42 percent to $3.74 at the close in New York, the most since July 20, the day SunEdison announced plans to buy the company.

The company is trading at a discount to the value of its operating assets, Vishal Shah said in a research note Friday. He upgraded the shares to buy from hold and raised his price target to $7.50. U.S. residential solar demand is strong, and will help drive installation growth for the Lehi, Utah-based company.

“We believe the company remains in a strong position to achieve its 2016 installation target,” he said. “Additionally, after a slow seasonal start, fundamentals in the U.S. resi market are improving.” The company said in April it expects to install 260 megawatts this year, up 12 percent from 2015.

Vivint announced May 23 that it had arranged $75 million in tax-equity financing to help build about 45 megawatts of rooftop power systems. In tax-equity deals, developers with small balance sheets sell tax credits that they can’t use to investors, which then apply the benefits to their own tax bills.

The deal is a sign that Vivint will be able to raise the funds it needs to develop more rooftop solar systems, Shah said. Vivint is the second-largest U.S. residential solar installer, trailing SolarCity Corp.

Vivint scrapped in March its acquisition by SunEdison, which has since filed for bankruptcy. Vivint called the acquisition process a disruption that slowed its installation rates in the second half of last year.

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