What Happened?
Shares of residential solar energy company Sunrun (NASDAQ: RUN) jumped 3.6% in the afternoon session after analysts at both Mizuho and J.P. Morgan raised their price targets for the residential solar company. Mizuho boosted its price target significantly to $21 from $13, while maintaining an "outperform" rating on the stock. Similarly, J.P. Morgan increased its target to $16 from $13, keeping its "Overweight" rating. J.P. Morgan cited Sunrun's leadership position in the underpenetrated residential energy services market, which it expects to grow at a double-digit rate. The firm also pointed to the company's strong revenue visibility from long-term customer contracts and potential for market share gains due to favorable Investment Tax Credit (ITC) rules. These bullish analyst notes provided a positive catalyst for the stock, signaling growing confidence in Sunrun's future performance and growth prospects within the clean energy sector.
After the initial pop the shares cooled down to $10.67, up 2.9% 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 7 days ago when the stock dropped 10.6% on the news that President Donald Trump directed federal agencies to strengthen provisions to repeal or modify tax credits for solar and wind energy projects and made negative comments about the renewable energy sources.
The move sent a chill through the renewable energy sector, with solar stocks bearing the brunt of the sell-off. The directive to review and potentially eliminate crucial tax incentives that have supported the industry's growth, creates significant uncertainty for companies like Sunrun, which rely on these credits to make residential solar installations more affordable for customers. The market reacted swiftly to the perceived threat to the solar industry's business model.
Sunrun is up 4.5% since the beginning of the year, but at $10.67 per share, it is still trading 50.4% below its 52-week high of $21.50 from August 2024. Investors who bought $1,000 worth of Sunrun’s shares 5 years ago would now be looking at an investment worth $297.91.
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