Sunrun Inc . (NASDAQ:RUN), a leading residential solar panel and home battery provider, maintained its Buy rating and a $20.00 price target from an analyst at Goldman Sachs. The endorsement follows Sunrun's recent announcement of a national partnership with homebuilder Toll Brothers (NYSE:TOL) for solar and storage installations, disclosed after the market closed on Monday.
The partnership is expected to modestly enhance Sunrun's installation potential by a low-single digit percentage in 2025. The analyst noted that this collaboration signals a positive step for Sunrun in capturing a larger market share and securing more volume in a segment where it has historically been less aggressive compared to its peers, specifically in new home constructions.
This move is seen as a strategic growth opportunity for Sunrun, especially as the U.S. residential solar market is anticipated to continue its recovery and gain momentum into the next year.
The partnership with Toll Brothers allows Sunrun to tap into a broader customer base, providing solar and storage solutions for new homes, which may contribute to the company's growth trajectory.
The Goldman Sachs analyst's comments underscore the potential of the partnership to bolster Sunrun's market position. The firm's reiteration of the Buy rating reflects confidence in the company's growth prospects, backed by the recent deal and the overall positive outlook for the residential solar sector in the United States.
Investors in Sunrun can view this partnership as a strategic endeavor to expand its presence in the residential solar market, particularly in the new home segment, which could play a role in the company's performance and valuation in the years to come.
Sunrun Inc. has seen a series of significant developments. The company has reported a record-setting performance for Q2 2024, installing over 116,000 solar and storage systems, and generating a total value of $310 million. This achievement coincides with Sunrun reaching over 1 million customers, marking a major milestone in the clean energy sector.
Sunrun has also announced the end of its sales partnership with Costco (NASDAQ:COST), however, this has not affected its Hold rating and $18.00 price target by Truist Securities. The company is redirecting its efforts to expand its presence in other retail and sales channels, and does not anticipate a substantial financial impact from the end of the Costco partnership.
Sunrun, in collaboration with Vistra Corp, launched the TXU Energy & Sunrun Battery Rewards program in Texas, aimed at improving grid reliability. Furthermore, Sunrun has maintained its Hold rating from Truist Securities following the announcement of its third lease/power purchase agreement (PPA) securitization of the year, a $365 million asset-backed securities deal.
Jefferies initiated coverage of Sunrun with a Buy rating, citing the company's promising cash generation forecast and potential for further monetization opportunities.
Looking ahead, Sunrun plans to increase its storage installation guidance while narrowing its solar installation predictions for 2024.
InvestingPro Insights
With the recent strategic partnership between Sunrun Inc. and Toll Brothers poised to enhance the company's market share, investors are keenly observing Sunrun's financial health and market performance. According to InvestingPro data, Sunrun currently has a market capitalization of approximately $4.32 billion. Despite a challenging environment reflected by a negative P/E ratio of -3.03 and a revenue decline of 14.84% over the last twelve months, Sunrun's gross profit margin stands at 10.03%, indicating some resilience in its core operations.
InvestingPro Tips suggest that Sunrun operates with a significant debt burden, which may hinder its ability to make interest payments, and analysts do not expect the company to be profitable this year. However, it's worth noting that the company's liquid assets exceed its short-term obligations, and there has been a strong return of 39.25% over the last three months, with the stock price seeing a large uptick of 66.61% over the last six months. This volatility could present opportunities for investors with a higher risk tolerance.
For those considering investing in Sunrun, it is crucial to weigh these dynamics, and additional insights are available on InvestingPro, with over ten more InvestingPro Tips accessible for a deeper analysis of the company's outlook and potential investment strategies.
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