SunEdison downgraded, down another 7%
Nov 12 2015, 07:56 ET | About: SunEdison (SUNE) | By: Stephen Alpher, SA News Editor [Contact this editor with comments or a news tip]
"Simplifying things, we no longer believe investors believe management's forward guidance," says Axiom Capital analyst Gordon Johnson, downgrading SunEdison (NYSE:SUNE) to Sell with $2 price target.
The company sold just 41MW of projects at a 9.6% gross margin in Q3, not even close to what management guided to in early October. In addition, Terraform Power (NASDAQ:TERP) said it would provide a "run-down" valuation and assured it did not have to take drops from SUNE or invest in SUNE's warehouses. Well, it provided no analysis around a "rundown" company valuation, and committed another $388M to the Invenergy warehouse (via debt, thus boosting its leverage).
"Unless SUNE can find new cheaper sources of funding and/or sell projects at the high-teens margins it claims – the warehouses are NOT cheap, with rates around 6%, & tied to LIBOR – it seems likely fundamentals are set to worsen (i.e., our base case)."
SUNE -6.9% to $4.56 premarket
SunPower Announces Fiscal Year 2016 Guidance
For fiscal year 2016, the company expects non-GAAP revenue of $3.3 billion to $3.5 billion, gross margin of 13 percent to 15 percent, EBITDA of $515 million to $565 million, capital expenditures of $210 million to $240 million and gigawatts (GW) deployed in the range of 1.7 GW to 2.0 GW. On a GAAP basis, the company expects revenue of $1.2 billion to $1.4 billion, gross margin of 16 percent to 18 percent and net loss of $415 million to $365 million.
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