What Happened?

Shares of residential solar energy company Sunrun (NASDAQ: RUN) jumped 2.8% in the afternoon session after the company's stock continued to rise following a significant analyst upgrade and news of potential expansion into the data center market. 

This move extended a rally from the previous trading session when the stock jumped after Jefferies upgraded its rating from "Hold" to "Buy." The investment firm also more than doubled its price target to $21 from $11, citing expectations for strong cash generation and future growth. Adding to the positive sentiment, it was reported that Sunrun was exploring the use of its residential batteries to power data centers. This new venture could open up considerable growth opportunities for the solar energy company.

After the initial pop the shares cooled down to $19.12, up 4.2% from previous close.

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What Is The Market Telling Us

Sunrun’s shares are extremely volatile and have had 79 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.

The previous big move we wrote about was 1 day ago when the stock gained 8.4% on the news that Jefferies upgraded the stock from "Hold" to "Buy" and significantly raised its price target. Analyst Julien Dumoulin-Smith adjusted the price target to $21.00 from a previous $11.00, a substantial increase of over 90%. This move from the investment firm reflected a much more positive outlook for the company. Upgrades of this nature often signal to the market that an analyst sees improving business conditions for the company, which can attract investor interest and boost share prices.

Sunrun is up 87.3% since the beginning of the year, and at $19.12 per share, has set a new 52-week high. Investors who bought $1,000 worth of Sunrun’s shares 5 years ago would now be looking at an investment worth $250.10.

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