Shares of Sunrun (NASDAQ:RUN) gained 3.7% in early action Wednesday after Citi upgraded the stock to Buy, saying headwinds are priced-in and the valuation is attractive.
Citi analysts upgraded the solar company to Buy from Neutral while adjusting their price target to $21 from $25. The new price target offers 38.5% upside from Tuesday's closing price.
With shares down 37% year-to-date on higher rates and the NEM impact, the analysts said with these impacts priced-in, the company is not getting credit for: "1) market share gains from TPO shift, 2) path to FCF generation, 3) no corporate level equity raises, 4) projected component cost deflation, 5) ITC adder benefits, and 6) demonstrated success in selling battery storage (>80% attach rate on new sales in CA and >30% nationally)."
in 2024, California is anticipated to encounter challenges. However, due to Sunrun's dominant position with over 60% of the third-party owned (TPO) market and a secure financial position, it is likely that the projected consensus of around 6% growth in megawatt (MW) installations during FY24 can be realized, the analysts commented. This is attributed to consumer interest in adopting solar+storage solutions to reduce utility expenses.
Furthermore, the analysts said that there is potential upside to net subscriber value and hold the view that the stock's value is reasonably estimated at approximately $21 per share in the long term.