Sunedison Inc (N:SUNE) has been on an incredible run in the market over the past few trading sessions. The climb we've seen has been fueled by the cancellation of deal talks with regard to another renewable energy company. Now, with the growth we've seen, investors are starting to ask if SUNE is going to continue on its run to the top. For me, the real question is, “Can SUNE break past $4.12?” Today, we'll talk about the canceled deal, whether or not the stock is likely to break through the $4.12 resistance point, and what we can expect to see from SUNE moving forward.
The Canceled Deal That Sent SUNE Upward
Sunedison's subsidiary, TerraForm Global was planning on a $3.45 billion deal with a Brazilian renewable energy company known as Renova Energia SA (SA:RNEW11). Under the deal, TerraForm would give Renova $3.45 billion in shares in exchange for the purchase of generation assets. However, the deal started to fall apart when Sunedison refused to transfer $250 million in shares to purchase a 15% stake in Renova Energia, which happened to be a condition for the larger deal with TerraForm. Recently, SUNE announced that it had canceled talks with Renova Energia, effectively terminating any chance of a deal between the two companies.
Investors obviously liked what they heard based on what we've seen in the market as a result. Since the cancellation of the deal, SUNE has been on a strong upward trend, one that seems to be continuing today.
Is This Going To Turn Into A Full Recovery For SUNE?
While there are several that have become overwhelmingly bullish with regard to SUNE, I don't believe that this will prove to be a full recovery. Unfortunately, the reality is that while Sunedison focuses on renewable energy, it's important to remember that the stock is part of the energy sector, a sector that has been struggling for quite some time. The bottom line here is that for SUNE to see any kind of drastic improvement in the stock that is to last for a while, the energy sector as a whole is going to have to improve as well. I simply don't see that happening any time soon. While I do believe that over the course of a couple of years, the energy sector is going to recover and that SUNE will do incredibly well at this point, I simply can't subscribe to the idea that the struggles are over for this stock or any other in the energy sector.
Considering what we've seen in the market recently and what we're seeing surrounding SUNE at the moment, I'm expecting to see more gains throughout the rest of this week, and likely the beginning of next week. However, when the stock reaches $4.12 per share, investors are likely to get cold feet and start selling off. I wouldn't imagine this run breaking through the resistance at this point.
SUNE Analysis
Out of 2 analysts covering Sunedison, 2 rate it "Buy", 0 "Sell", while 0 "Hold". $45 is the highest target while $20 is the lowest. The $30 average target is 695.76% above today's ($3.77) stock price. Sunedison was the topic in 9 analyst reports since August 7, 2015 according to StockzIntelligence Inc. Deutsche Bank (DE:DBKGn) maintained the stock on September 6 with "Buy" rating. Credit Suisse (VX:CSGN) maintained it with "Outperform" rating and $45 target price in an August 7 report. JP Morgan initiated the shares of SUNE in a report on August 31 with "Overweight" rating. Finally, Robert W. Baird maintained the stock with "Hold" rating in an August 18 report.
SunEdison, Inc. is a developer and seller of photovoltaic energy solutions, an owner and operator of clean power generation assets, and a developer and maker of silicon wafers. The company has a market cap of $1.15 billion. The Firm operates in three divisions: Solar Energy, TerraForm Power and Semiconductor Materials through SunEdison Semiconductor Ltd. (SSL). It currently has negative earnings. The Company's Solar Energy segment provides solar energy services that integrate the design, installation, financing, monitoring, activities and maintenance portions of the downstream solar market for the Company's customers.