BMO Capital analyst Ameet Thakkar maintained a Hold rating on Sunrun (RUN – Research Report) today and set a price target of $20.00.
Ameet Thakkar has given his Hold rating due to a combination of factors impacting Sunrun’s business and financial outlook. Despite the company’s positive performance in terms of storage uptake and its stable solar photovoltaic (PV) capacity growth, which were both better than Thakkar’s initial expectations, there are some concerns. Notably, the company’s strategic focus on combining solar PV with storage to combat the sluggish residential solar market has proven fruitful, particularly in California, suggesting a strong start to their customer-centric approach. Moreover, Sunrun’s net subscriber value (NSV) has shown robust figures, with further improvements anticipated due to investment tax credit (ITC) adders and falling hardware costs.
However, Thakkar is cautious about the recent equity-linked financing initiative launched by Sunrun. Despite the company’s target for cash generation and its efforts to minimize the cost of capital, the decision to issue convertible securities was unexpected and raises questions about the valuation. This approach could potentially increase the cost of capital and have a dilutive effect on the stock, especially since Sunrun’s shares are currently trading at a discount. The company’s strategy to mitigate this through a call spread is noted, but it does not fully alleviate the concerns regarding the potential impact on shareholder value.
In another report released yesterday, Northland Securities also maintained a Hold rating on the stock with a $12.00 price target.
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Sunrun (RUN) Company Description:
SunRun, Inc. engages in the design, development, installation, sale, ownership and maintenance of residential solar energy systems. It sells solar service offerings and install solar energy systems for homeowners through its direct-to-consumer channel. It also offers plans such as monthly lease, full amount lease, purchase system, and monthly loan. The company was founded by Edward H. Fenster, Robert N. Kreamer and Lynn M. Jurich in January 2007 and is headquartered in San Francisco, CA.
Read More on RUN:
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