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Thursday, April 06, 2017 3:43:02 PM
8point3 Energy (CAFD -9.1%) would fetch a per share valuation of just $9-$10 on the open market, which would represent a ~30% discount to CAFD's closing price yesterday before First Solar's (FSLR) announcement that it was reviewing options for its interests in the company, Axiom Capital's Gordon Johnson says.
The analyst says that without support from FSLR, which accounts for ~50% of CAFD's expected 600 MW of right of first offer dropdowns, there may be a well-founded concern about the yieldco's ability to continue growing; the lower the perceived growth rate of a yieldco, the higher the required dividend yield, and thus the lower the stock's price, according to Johnson.
Johnson, who has a Sell rating and $21 price target on FSLR, says he is not surprised by FSLR's move, suspecting the parent has a desire to avoid having to pull its projects out of CAFD's right of first offer pool as project economics in the U.S. are on the decline.
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