Baird says buy SolarCity as worries overdone, recent financing favorable

The shares of SolarCity (SCTY) are advancing in a down market after research firm Robert W. Baird upgraded the stock to Outperform from Neutral. The firm says that the company's recent financing deals are favorable, while concerns about regulatory issues are overdone.

WHAT'S NEW: Over the last few months, SolarCity has made a number of financing deals that show it still has access to capital, according to Robert W. Baird analyst Ben Kallo. These transactions should ease investors' concerns about the company's financial position, the analyst stated. Meanwhile, although Nevada's utility regulator recently reduced the amount of energy that solar customers can sell back to utilities, existing customers may be grandfathered into the old program, and New York looks poised to create a favorable environment for the company, Kallo wrote. Additionally, the analyst believes that SolarCity is benefiting from the renewal of the solar investment tax credit and declining solar system costs. However, he acknowledged that SolarCity's balance sheet is "a point of concern" for investors, and recommended that the company issue additional equity to give it a funding "cushion" The analyst set a $37 price target on the shares.

WHAT'S NOTABLE: On June 2, SolarCity unveiled a new loan program in 14 states. According to the company ,the program will lower the monthly costs of its customers in those states.

OTHERS TO WATCH: Other companies that offer solar systems to residential customers include Vivint Solar (VSLR) and Sunrun (RUN).

PRICE ACTION: In early trading, SolarCity climbed about 0.5% to $23.20.