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In a research note on the alternative energy market in the first quarter, KeyBanc analysts upgraded Sunrun (NASDAQ:RUN) to Overweight with a $27 per share price target.
The firm stated that the upgrade was based on the company’s attractive valuation, encouraging data from CA, the firm’s view that residential solar companies have sufficient pricing power to execute in the higher interest rate environment, and the macro view that we’re nearing the end of the tightening cycle.
“Shares of residential solar companies, including RUN, underperformed materially since the beginning of the tightening cycle, and we acknowledge that the shares have been visibly inexpensive for some time now,” said KeyBanc.
“However, we believe that we have seen the worst of the tightening cycle, and therefore the sentiment should be bottoming at these levels. Additionally, we have a constructive view of RUN’s fundamentals and believe that multiple overhangs created by CA regulatory changes and rate volatility should begin to dissipate in the NT.”
Analysts at the firm also believe RUN is gaining significant market share in California, “which should soften the impact of poor weather/NEM reform that is impacting the overall market.”
