Exactly what are investors putting their money in when they invest in SunEdison (SUNE)? We just don't know, and analysts are starting to throw in the towel on the once-loved solar energy company.
On Monday, an analyst team at Cowen and Co. led by Jeffrey Osborne suspended its rating on Missouri-based SunEdison, citing reports of debtor-in-possession negotiations, legal uncertainty and a lack of financials. Until Monday, Cowen had an Outperform rating on the company with a $10 price target.
As a reminder, SunEdison delayed releasing its financials for 2015 twice so far. This means that the most recent audited financials investors have seen on the company are nearly six months old. And, even those numbers may be questionable. According to recent filings with the Securities and Exchange Commission, former executives of SunEdison made allegations about the accuracy of the company's anticipated financial position that may force it to reassess its liquidity position.
"We certainly have gotten the SUNE investment case wrong," Osborne wrote in Monday's note. "While we had concerns about the pace of growth of the company through M&A, what we got wrong in a big way was the inability for the company to sell assets to delever the balance sheet due to the litigation impact and 10-K delays."
Indeed, SunEdison's woes intensified in July when it announced plans to acquire Vivint Solar (VSLR) for $2.2 billion. The deal, which was revised downward in December, was ultimately scrapped in March after what Vivint called SunEdison's "failure to consummate the merger." As a result of the abandoned deal, Vivint is suing SunEdison.
"Endemic -- everyone thought there was a market for everything not that long ago; now there is a market for almost nothing in the space and no money to borrow," Jim Cramer said of SunEdison's dramatic fall.
While Osborne's previous bull case for SunEdison focused on the company's backlog of projects, he acknowledged that his investment thesis underappreciated the "chilling effect" of the company's delayed 10-K filing and the end of the of the Vivint deal on its ability to access capital and sell projects.
In Monday's note, Osborne included a timeline -- not unlike the one Real Money posted on Friday -- of the trouble the company faced since announcing the Vivint deal in July.
While investors await SunEdison's financials as the stock swings wildly in both directions, Osborne sees three options for the company: bankruptcy and subsequent restructuring; asset sales and "grinding it out through the court process;" and splitting up the company by decoupling the yieldcos, TerraForm Power (TERP) and TerraForm Global (GLBL), and using any proceeds to delever the balance sheet.
For now, however, it's anybody's guess.