Can Sunrun Weather the Policy Storm? Analysts Weigh Potential Solar ITC Cuts

Sunrun Inc. (NASDAQ:RUN) shares are trading higher connected Thursday aft the institution reported better-than-expected first-quarter results connected Wednesday.

The institution reported an EPS of 20 cents per share, which bushed the expert statement estimation of 25 cents nonaccomplishment and gross of $504.27 million, which bushed the consensus estimation of $484.06 million.

Guggenheim analyst Joseph Osha kept Neutral standing connected the banal and writes that portion wide lawsuit measurement maturation is humble successful the 4th (additions of 25,428, up lone 6%, with expected decelerating comps).

The expert anticipates the institution to proceed to prioritize liquidity and profitability implicit assertive maturation successful the adjacent to mean term, awaiting a much favorable environment.

Also Read: Jim Cramer: Sunrun Had ‘Bad Couple Of Quarters,’ ExlService Holdings Is ‘Solid’

Osha projects Sunrun to go an progressively ascendant subordinate arsenic the residential star manufacture consolidates.

The expert writes that the company’s main challenges are policy-related, peculiarly the star Investment Tax Credit (ITC), which importantly impacts their currency procreation ($50 cardinal interaction connected currency travel for each 1% alteration successful the effectual ITC rate).

The expert notes that the institution has strategies to counteract a little ITC, and absorption stated their content that the institution tin inactive make currency nether specified circumstances.

However, the expert adds that accurately predicting the nett effect and timing of imaginable changes to the Inflation Reduction Act connected currency procreation is exceedingly challenging.

Osha expects this to airs a sizeable situation for RUN investors successful the mean term.

KeyBanc analyst Sophie Karp reiterated a Sector Weight standing and said the results bushed consensus. They exceeded their star and retention capableness summation guidance and marked their 4th quarter of affirmative currency flow.

The company’s 2nd 4th and FY25 guidance indicates beardown request crossed channels, and they continued to trim firm debt, adds the analyst.

Karp writes that portion these positives mightiness connection immoderate valuation support, broader uncertainty astir authorities and fiscal policy, coupled with persistently precocious industry-wide outgo of capital, tin pb to shares improbable to regain affirmative momentum successful the adjacent term.

Investors tin summation vulnerability to the banal via the Invesco Solar ETF (NYSE:TAN) and the ProShares S&P Kensho Cleantech ETF (NYSE:CTEX).

Price Action: RUN shares are up 11.7% astatine $8.255 at the past cheque connected Thursday.

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