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Vivint Solar (VSLR $3.72) Flies On UPGRADE


Vivint Info

This past Friday shares of Vivint Solar (VSLR 3.74) bounced off the bottom and rose 42% to 3.74. This occurred after the shares were upgraded by Deutsche Bank and gave it a price target of $7.50. The shares are down from a 52 week high of $16.00. Deutsche Bank believes that the shares are trading at a discount to valuation and operating assets.

"With the tax equity environment for VSLR improving, we believe the company remains in a strong position to achieve its 2016 installation targets," the bank wrote in a note to investors, per "We believe VSLR's powerco assets are worth about $5/share (assuming 8% discount rate) which would imply that at current levels, shares are assuming the devco is worth ($2.50)/share," Deutsche Bank added in an article from The Street.

VSLR has been growing rapidly and recently was offered to be acquired by Sun Edison for 2.2 billion dollars versus today's market cap of $400 million. Something is off here because SUNE was decimated and financially strung out the acquisition of VSLR was called off. The shares of VSLR which were $10.00 in January crated to $2.33 when the deal was called off. Vivint Solar has had a difficult time recently watching its stock price go from $12 pre-acquisition to $15 during the acquisition before dropping back down as SunEdison's price crashed and SUNE went into bankruptcy. However, despite this, after the acquisition was called off, Vivint Solar system was dragged through the mud currently trading at 30% of its pre-acquisition price.

Last week the Company announced it closed a tax equity investment fund with a new investor, with an aggregate funding commitment of $75 million, which will enable the company to install more than 45 megawatts of residential solar energy systems. On top of that, Vivint Solar has approximately $225 million of cash ($267 million without its current obligations). Adding that on to a $280 million valuation from its holdings and that means its valuation should be approximately $515 million, or a 20% increase from its present market cap, which would be the lower bound of the company's valuation.

Even though it had a 42% bounce off it's low we feel VSLR is a good speculation at it's current price of $3.72.Be sure to enter a stop-loss order at $3.25.In the event the shares gap up at the opening we would consider paying up to $4.00.