Sun Edison Inc. (NYSE: SUNE) has enjoyed quite a recovery from its lows as MEMC. If the analyst team at BofA/Merrill Lynch is correct, Sun Edison investors are going to have a whole lot more joy heading their way. Sun Edison was upgraded to Buy from Neutral and was given a $10 price target after the stock cratered on its earnings report.

Krish Sankar and Andrew Hughes issued this upgrade, and the team points out that the June quarter’s results and guidance were below street expectations. While Sun Edison lowered the full-year semiconductor-related revenues due to light demand and pricing pressure, the analysts like the diversity of the pipeline and believe it will continue to grow. The $10 price target is a “sum of the parts” analysis, now that its stock fell more than 20% after the report.

The analysts did discuss the volatility of solar projects revenue recognition, something that is an issue for any and every surviving solar outfit today. They said:

It is clear to us after this solar developer reporting season that investors still need to become more comfortable with swings in solar project revenue recognition that will continue to occur over the next 2-3 years, and the realization that margins on newer projects are tighter. Our long term view on solar is positive, and as a result we take a holistic view of company pipelines in our approach to valuation. Sun Edison added over 200MW to its pipeline, over half of which are contracted. Our value of the company’s project pipeline increases to $1.2 billion from $1 billion.

The analysts actually lowered some expectations in 2013 but maintained estimates for 2014. The number for 2013 was $2.68 billion, with a net loss of $0.19 per share, but 2014 estimates call for $3.62 billion in revenue, with earnings growing to $0.58 per share.

Sun Edison shares are up 7% at $7.91, after closing at $7.39 on Wednesday, and its 52-week range is $2.15 to $10.47. The upside projection now is for gains of 35% or so from Wednesday’s closing price, if the Merrill Lynch analyst team is right.

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