Rooftop solar panel installer Sunrun Inc. (NASDAQ: RUN) got a boost Friday morning when Piper Sandler’s Harrison upgraded the stock from Neutral to Overweight with a price target of $77 per share. At that price, upside potential to Thursday’s closing price of $47.20 is around 63%. Harrison’s upgrade is one of many over the past few weeks for the company that is widely viewed as the most likely to capitalize on growth in residential solar installation.
In his comments, Harrison noted:
Since the middle of February, solar stocks have come under significant duress due to a combination of rising interest rates, regulatory uncertainty associated with net energy metering [NEM] in CA [California], a lack of imminent catalysts, and a remarkable 2020 run. … [T]he market has line of sight toward longterm federal policy support via the “America Jobs Plan,” recent transactions highlight the group’s advantaged cost of capital even within a rising interest rate environment, and CA utilities are unlikely to win the NEM battle. Given recent share price weakness (down 51% vs. the recent peak) coupled with a strong growth story associated with residential solar (20-25% MW in ’21; 15% MW medium-term) and a management team with a history of value creation, we upgrade RUN to Overweight from Neutral.
The median price target on the stock is $81.00 and the high target is $108.00, implying upside potential of around 72% to the median and nearly 130% at the high target. The stock has gained around 6.3% in Friday morning trading.
Since March 1, Sunrun stock has been upgraded or initiated by nine of 11 analysts. The other two changed their price targets but not their ratings. One note of caution though could be the 18% increase in Tesla’s solar installation business in 2020. Analysts at Canaccord Genuity noted earlier this week that Tesla is beefing up its installation business this year.
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