Company Reports

We maintain our $14 fair value estimate for no-moat Sunrun following fourth-quarter results. We view shares as fairly valued.

Clean energy stocks have had a roller-coaster 18 months. Optimism following the passage of the Inflation Reduction Act in August 2022 gave way to rising interest rates in 2023. We highlight three key themes for investors to focus on in 2024: interest rates, U.S. policy, and profitability.

We lower our fair value estimate for no-moat Sunrun to $14 per share from $24 following third-quarter results. The lower valuation is a result of lower growth and higher capital costs moving forward, partially offset by a rising battery storage mix. We view shares as slightly undervalued in light of our Very High Uncertainty Rating.

Sunrun’s mission is to provide customers--primarily homeowners--with clean and affordable solar energy and related products. The company was a pioneer in the residential solar industry, offering its first solar lease in 2007. Sunrun targets day-one customer savings of 5%-45% compared with a customer's local utility rates. As of early 2023, the company had direct operations in 22 U.S. states and territories and was the U.S. residential solar market leader with high-teens market share share.

We trim our fair value estimate for no-moat Sunrun to $24 per share from $27 following second-quarter results. The slightly lower valuation is a result of assumed higher capital costs moving forward. We view shares as slightly undervalued in light of our Very High Uncertainty Rating.

Sunrun’s mission is to provide customers--primarily homeowners--with clean and affordable solar energy and related products. The company was a pioneer in the residential solar industry, offering its first solar lease in 2007. Sunrun targets day-one customer savings of 5%-45% compared with a customer's local utility rates. As of early 2023, the company had direct operations in 22 U.S. states and territories and was the U.S. residential solar market leader with high-teens market share share.

We maintain our $27 per share fair value estimate for no-moat Sunrun following its first-quarter results. We are puzzled by the sharp selloff in shares (down 15% at the time of writing) given the company’s results were in line with our expectations. We view shares as undervalued.

We maintain our $27 per share fair value estimate for Sunrun following its fourth-quarter results and 2023 outlook. While the company's growth guidance surpassed our expectations, this was largely offset by an increase in our discount rate. Our no-moat rating is unchanged. We view shares of Sunrun as slightly undervalued.

We are adjusting fair value estimates for some of our rooftop solar coverage after refreshing our long-term industry outlook. The fair value estimate changes range from a reduction of 26% for SunPower to no change for Generac and SolarEdge. We reduce Sunrun's and Enphase's fair value estimates by 16% and 5%, respectively.

Sunrun’s mission is to provide customers--primarily homeowners--with clean and affordable solar energy and related products. The company was a pioneer in the residential solar industry, offering its first solar lease in 2007. Sunrun targets day-one customer savings of 5%-45% compared with a customer's local utility rates. As of 2023, the company had direct operations in 22 U.S. states and territories and was the U.S. residential solar market leader with high-teens market share share.

On Dec. 15, California regulators finalized new rules that roll back incentives for rooftop solar customers. The final ruling appears largely consistent with the proposed decision last month, and we maintain our fair value estimates for the rooftop solar equities we cover, which we view as largely fairly valued.

In the last 18 months there have been numerous competitive announcements within the rooftop solar inverter space. These range from Generac’s microinverter acquisition in July 2021, to Sunrun funding an upstart provider (Lunar Energy) earlier this year, to Tigo announcing it plans to come public this week. In addition, we flag the expiration of Enphase’s exclusivity with SunPower in first-quarter 2024. Germany’s SMA also plans to launch a new residential solar inverter product for the U.S. market in second half 2023. These announcements highlight the fact that capital is flowing to the highly desirable rooftop solar inverter space, which possesses industry-leading margins.

On Nov. 10, California's utility regulator released a new proposed decision related to the closely watched net energy metering, or NEM, 3.0 debate. The new proposal appears to be a win for the rooftop solar industry relative to the original proposal in December 2021. We maintain our fair value estimates as we digest the details and await a final decision, which could come as soon as next month. We view much of our rooftop solar coverage as fairly valued following sharp upward share price moves.

We lower our fair value estimate for Sunrun to $32 from $34 following the company's third-quarter results. The primary driver of our fair value decrease is moderating customer growth as we assume the company prioritizes profitability over growth. We view Sunrun shares as attractive at current prices but expect them to remain subject to evolving interest rate expectations.

Sunrun’s mission is to provide customers--primarily homeowners--with clean and affordable solar energy and related products. The company was a pioneer in the residential solar industry, offering its first solar lease in 2007. Sunrun targets day-one customer savings of 5%-45% compared with a customer's local utility rates. As of late 2021, the company had direct operations in 22 U.S. states and territories and was the U.S. residential solar market leader with approximately 20% share.

On Aug. 24, Sunrun announced its investment in Lunar Energy, a startup looking to develop products targeting whole home electrification. We maintain our $34 fair value estimate for Sunrun as we await further disclosure regarding its Lunar investment. In addition to its relevance for Sunrun, we see the announcement as potentially relevant for SolarEdge and Enphase over the longer term.

On Aug. 15, a California administrative law judge extended the deadline for a decision on changes for rooftop solar customers in the state until Aug. 27, 2023. This is approximately one year later than we expected a revised proposed decision. We had expected a final decision before year-end 2022. We maintain our fair value estimates for rooftop solar-exposed stocks.

We increase our fair value estimate for Sunrun to $34 from $27 following the company's second-quarter results. The primary driver of our fair value increase is incorporating upside to rooftop solar demand as a result of the proposed Inflation Reduction Act of 2022. We view Sunrun shares as fairly valued at current prices.

Sunrun’s mission is to provide customers--primarily homeowners--with clean and affordable solar energy and related products. The company was a pioneer in the residential solar industry, offering its first solar lease in 2007. Sunrun targets day-one customer savings of 5%-45% compared with a customer's local utility rates. As of late 2021, the company had direct operations in 22 U.S. states and territories and was the U.S. residential solar market leader with approximately 20% share.

Less than two weeks after seemingly ending prospects of a climate spending bill, Sen. Joe Manchin and Senate Democrats announced support for the Inflation Reduction Act of 2022. While not final, the chances of ultimate passage appear high based on industry reports.