Analyst Julien Dumoulin Smith of Bank of America Securities reiterated a Buy rating on Sunrun (RUN – Research Report), with a price target of $21.00.
Julien Dumoulin Smith has given his Buy rating due to a combination of factors, including Sunrun’s impressive fourth quarter results and the positive outlook for fiscal year 2024. Smith’s analysis highlights Sunrun’s ability to dispel concerns that were negatively impacting its share performance early in the fiscal year. Despite fears of a decline in megawatt deployments, Sunrun has guided for stable deployments, effectively replacing a key retail partnership without a drop in projected volume. Moreover, Sunrun has demonstrated its capacity to generate cash for the second consecutive quarter and has set a significant target for annual cash generation moving into 2024 and beyond. This consistent cash flow, coupled with strategic refinancing that extends debt maturity and the potential for cost savings from hardware deflation and investment tax credits, has reinforced confidence in the company’s financial health and growth prospects.
Additionally, Dumoulin Smith addresses concerns around Sunrun’s strategy of offering contract renewals to power purchase agreement subscribers, which some investors view as a potential risk. However, he sees the company’s high extension rate not as a cause for caution but as an indication of operational success and customer satisfaction. He also underscores that the debate should focus on Sunrun’s capital needs versus the conceptual questions about contract renewals. With an updated valuation that accounts for new guidance and maintains existing assumptions for borrowing and discount rates, Smith sees a significant upside to Sunrun’s current share price, suggesting that the company’s improved risk profile following the fourth quarter report makes it an attractive investment.
According to TipRanks, Dumoulin Smith is a 4-star analyst with an average return of 2.8% and a 52.35% success rate. Dumoulin Smith covers the Utilities sector, focusing on stocks such as Duke Energy, NextEra Energy, and Ameren.
In another report released on February 22, Mizuho Securities also reiterated a Buy rating on the stock with a $28.00 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.
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