Start-up Sunrun (RUN) shares rallied 10.6% to close at $47.73 on June 16.
SunRun is a provider of residential solar panels and home batteries in America. It has been one of the hottest solar energy stocks over the past year, gaining 147.4% for investors. The solar energy stock is betting on a growing solar market, acquisitions, partnerships and continuous expansion of its sales channels to increase market access.
With a market capital of $9.7 billion, Sunrun has gained 19.3% in the past one month, but lost 23.4% in the past six months. (See Sunrun stock chart on TipRanks)
Why the Hike in RUN Price?
The jump came on a June 16th increase in the target price from Morgan Stanley analyst Stephen Byrd. Though Byrd maintained its overweight rating on Sunrun shares, he increased the price target to $91 from $86 per share. This implies 90.7% upside potential to current levels.
The analyst believes Sunrun to be "the most compelling clean energy stock" from its coverage list. He thinks that Sunrun will likely benefit from important energy trends like rising utility costs, high demand but falling storage costs for clean energy, and increasing power-generating capacity to meet the consumer demand for clean energy.
Furthermore, the analyst expects the company to eventually become a big player in the electric vehicles space and thereby expand its customer base going forward.
Moreover, the analyst believes that the company has stronger cash flow generation than its customers anticipated. He also commented that the company operates in a market that is huge and on the continuous verge of rising, with just a current penetration of 3%, implying that Sunrun has immense growth opportunities going ahead.
Sunrun, Ford Partnership - A Catalyst
On May 20, Sunrun partnered with Ford Motor Company to become a preferred installer for Ford Intelligent Backup Power solutions to its customers.
The deal will allow Sunrun to help F-150 Lightning EV owners to use their EVs as a reliable home backup energy source for their homes in case of a power outage. Furthermore, its will enable customers to install a solar and battery system at home and charge up their households with clean and affordable energy, along with charging their F-150 Lightnings with solar power.
The deal is expected to give Sunrun an edge over other players in the immensely competitive solar market.
Growing U.S. Solar Demand to Aid Sunrun
Per a Research and Market report, solar is expected to account for 39% of all new U.S. electricity generation capacity in 2021, surpassing wind for the first time. The U.S. Energy Information Administration (EIA) forecasts that renewable energy’s share of U.S. electricity generation will rise from 20% in 2020 to 22% in 2021.
Furthermore, from a long-term perspective, Technavio has forecasted the residential solar market in the United States to grow by $5.99 billion, at a CAGR of more than 10%, from 2021-2025.
Furthermore, strong federal policies like solar investment tax credit (ITC) have induced more growth in the U.S. solar industry.
Such promising projections will most likely boost Sunrun growth prospects in times to come.
Other Bullish Analysts’ View
Similarly, other analysts are also positive on Sunrun stock.
On June 1, Evercore ISI analyst James West reiterated a Buy rating on the stock assigned a price target of $87.00. This implies 82.3% upside potential to current levels.
West commented about California Assembly Bill 1139, which could reduce the benefits of net metering to current and future owners of rooftop solar panels. He said, “We believe that by the time a decision is made on Net Metering 3.0 in the state of California, enforcement likely will not occur until 2024. By that point, CA solar installations will be even further along and grandfathered in under NEM 1.0 and 2.0. Therefore, this should remove the threat to California net metering changes that has been an overhang on RUN’s stock."
On June 2, Guggenheim analyst Joseph Osha initiated coverage of the stock with a Buy rating and a price target of $56 (17.3% upside potential).
Osha remains optimistic about the company’s growth and believes that the company is increasing its share in the growing residential solar market. Furthermore, he expects that Sunrun will soon reward its shareholders as it continues to grow in this space.
Of the 14 analyst ratings covered by TipRanks, 13 analysts carry a Buy rating and 1 analyst sports a Hold rating. There is no Sell rating for the stock. The RUN average analyst price target of $74.96 implies 57.1% upside potential from the current levels, which remains impressive.
Encouraging TipRanks Metrics
TipRanks’ Stock Investors tool shows that investors who hold portfolios on TipRanks currently have a Very Positive stance on Sunrun, with 5.6% of investors increasing their exposure to RUN stock over the past 30 days.
TipRanks data shows that financial blogger opinions are 75% Bullish on RUN, compared to a sector average of 73%.
Disclosure: Shalu Saraf held no position in any of the stocks mentioned in this article at the time of publication.
Disclaimer: The information contained herein is for informational purposes only. Nothing in this article should be taken as a solicitation to purchase or sell securities.