Jefferies cuts Sunrun stock rating, slashes price target to $8
Investing.com
Published Mar 12, 2025 05:51AM ET
On Wednesday, Jefferies analyst Julian Dumoulin-Smith downgraded Sunrun stock from Buy to Hold and significantly reduced the price target to $8 from the previous $14. The revision reflects concerns over the residential solar market's lack of recovery and ongoing uncertainties surrounding the Inflation Reduction Act (IRA). According to InvestingPro analysis reveals concerning metrics, including a high debt-to-equity ratio of 5.13x and significant cash burn rate. Get access to 12+ additional ProTips and comprehensive financial analysis through InvestingPro's detailed research reports.
Sunrun, a leading player in the residential solar industry, has been recognized for its strong performance amidst challenging market conditions. However, the analyst's decision to downgrade the stock rating to Hold comes as the sector faces persistent headwinds that make it difficult to predict outperformance among residential solar peers. The company's enterprise value to EBITDA ratio stands at an elevated 327.7x, suggesting a premium valuation despite operational challenges.
The lowered price target of $8 indicates a more conservative outlook on Sunrun's stock, as Jefferies awaits further clarity on the situation. The residential solar market has not shown signs of recovery, and the uncertainties regarding the IRA continue to pose risks to companies operating within this space. While InvestingPro analysis suggests the stock is slightly undervalued at current levels, investors should note that 4 analysts have recently revised their earnings expectations upward for the upcoming period.
Jefferies has expressed a cautious stance, opting to pause on a more optimistic rating until there is more certainty in the market. This move by the analyst suggests investors may also need to consider these factors when evaluating Sunrun's stock potential.
The downgrade and the new price target are now key indicators for investors monitoring Sunrun's performance. The company has been commended for its navigation of uncertain times, but the caution expressed by Jefferies may signal a need for vigilance as the industry confronts ongoing challenges.
In other recent news, Sunrun Inc (NASDAQ:RUN). reported its fourth-quarter 2024 earnings, significantly exceeding analysts' expectations with an earnings per share of $1.41, contrary to the projected loss of $0.27. However, revenue fell short of forecasts, coming in at $518.5 million compared to the anticipated $544.85 million. Deutsche Bank maintained its Buy rating on Sunrun, setting a price target of $10.50, highlighting the company's effective navigation of industry challenges and its strategic financial maneuvers, such as extending corporate debt maturities. Despite the challenges, Sunrun has shown positive cash generation for three consecutive quarters and anticipates maintaining this trend throughout 2025.
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Mizuho Securities adjusted its price target for Sunrun to $15.00 from $18.00 while maintaining an Outperform rating. The firm's analysis pointed to increased competition and higher capital costs as reasons for the downward revision. Sunrun's strategic focus on storage-first solutions has resulted in a notable increase in storage attachment rates, now at 62%. The company has also expanded its customer base to 1 million, with 889,000 subscribers, contributing to an annual recurring revenue of over $1.6 billion, a 23% year-over-year increase.
Sunrun's leadership in the renewable energy sector is underscored by its focus on storage solutions and subscription-based services, which are expected to continue attracting customers. The company's strategic actions, including securing $7 billion in capital in 2024 and increasing its Investment Tax Credit sales tax, reflect its robust financial positioning amidst industry challenges.
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Written By: Investing.com
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