Climateer Investing: Morgan Stanley: "SolarCity will face growing competition from energy and financial service companies" (SCTY)

Friday, August 15, 2014

Morgan Stanley: "SolarCity will face growing competition from energy and financial service companies" (SCTY)

The stock closed Thursday at $71.19.
From Investors Business Daily:

SolarCity (NASDAQ:SCTY) will face growing competition from energy and financial service companies just as the Investment Tax Credit (ITC) for solar installations is reduced, says Morgan Stanley, which initiated coverage on the company Thursday with an equal weight, or neutral, rating.

SolarCity edged down a fraction in midday trading in the stock market today, near 71. SolarCity stock is up 25% in 2014. San Mateo, Calif.-based SolarCity's chairman is Elon Musk, founder of electric car maker Tesla Motors (NASDAQ:TSLA).

The federal ITC for solar installations is slated to be reduced from its current 30% rate to 10% on Jan. 1, 2017, for commercial and utility scale solar power systems.

"Competition is likely to become acute just as ITC steps down," Morgan Stanley analyst Timothy Radcliff said in a report. "The risk from pure-play integrators is substantial, but risk from more established energy and financing companies is far greater, in our view.

"We expect these formidable entrants to have low market share for the next two to three years as they build necessary infrastructure; however, in the medium to long term, we believe that their sustainable advantages with respect to reputation, reliability and cost of capital will pose a significant threat to SolarCity."...MORE