Vivint Solar Falls to Support, Analysts Remain Bullish

Vivint Solar, Inc. (VSLR) shares fell more than 12% after disappointing fourth quarter results and guidance, but analysts are confident that it's nothing but a short-term blip. Revenue rose 21.4% to $77.1 million, missing consensus estimates by $11.05 million, but net losses came in at 27 cents per share, beating consensus estimates by six cents. Fourth quarter installations rose 22 percent to about 66 megawatts (MW), which the company expects will increase by 57 to 60 MW during the first quarter of 2020.

Analysts believe that the revenue shortfall is temporary and that the long-term trend remain bullish. Oppenheimer said that Vivint Solar continues to show steady performance despite incremental competition for salespeople and leads. Roth Capital notes that COVID-19 could have an impact, but the disruption is only a temporary delay in the growing adoption of solar.

The consensus is that the stock is going the right direction by building out its own channels, but its outlook could take a hit from the COVID-19 situation, leading to smaller price targets.

Chart showing the share price performance of Vivint Solar, Inc. (VSLR)

From a technical standpoint, the stock fell to the 200-day moving average at $7.93. The relative strength index (RSI) fell near oversold levels with a reading of 35.41, but the moving average convergence divergence (MACD) remains in a bearish downtrend. These indicators suggest that the stock could see some near-term consolidation before moving lower.

Traders should watch for a rebound from the 200-day moving average toward upper trendline resistance at around $8.80. A breakout from these levels could lead to a move to close the gap around around $9.25. If the stock breaks down from the 200-day moving average, traders could see a move toward the trendline at around $7.00 where there's strong support.

The author holds no position in the stock(s) mentioned except through passively managed index funds.

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