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Why Sunrun Inc.'s Shares Popped 14% Today

Travis Hoium, The Motley Fool

What happened

Shares of solar installer Sunrun Inc. (NASDAQ: RUN) jumped as much as 14% in trading Monday after analysts at Credit Suisse initiated very bullish coverage on the stock. Shares traded higher throughout the day and were up 11.9% at 2:10 p.m. EST.

So what

Credit Suisse initiated its coverage on Sunrun's stock with a buy rating and $15 price target on the stock. That's almost triple Friday's closing price, and would be a massive jump in value over the next year, the time frame usually covered by price targets.

A solar installation on a steep roof

Image source: Getty Images.

The analyst pointed to Sunrun likely surpassing Tesla as the No. 1 U.S. solar installer in the fourth quarter, and the company's multichannel approach, as its biggest strengths. The company also has access to ample financing to fund its solar leasing business, which is where it creates value.

Now what

The bullish call comes at an odd time for the U.S. solar industry. Solar tariffs will make it more costly to install solar in the U.S. and could squeeze Sunrun's margins over the next few years. Then there's rising interest rates, which will make financing more costly. Finally, Sunrun has doubled down on leasing solar systems to customers as the market share of leases has gone down. I'm not sure how long the company can fight that trend.

Sunrun has done a good job gaining market share. But it's facing some headwinds that will put pressure on a business that's already fighting against market trends, so I'm much more cautious on the stock long-term.

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Travis Hoium has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Tesla. The Motley Fool has a disclosure policy.