On Thursday, RBC Capital Markets adjusted its price target for Sunrun Inc . (NASDAQ:RUN), a leading home solar panel and battery provider, reducing it to $15.00 from the previous $17.00. Despite the adjustment, the firm has reiterated its Outperform rating for the company's stock.
The revised price target comes as the industry grapples with the impact of rising interest rates, which have affected the valuation of subscriber-based companies like Sunrun. RBC Capital acknowledges these challenges yet maintains a positive outlook on the firm's potential to deliver customer value. According to RBC, Sunrun's performance is currently undervalued, especially when considering the financial difficulties faced by its competitors.
RBC Capital notes that comparing Sunrun directly with its peers is complicated due to differences in accounting practices, tax equity structures, and the calculations used for non-GAAP asset values. These factors contribute to the prevailing uncertainty in the market.
Nevertheless, RBC Capital anticipates that Sunrun will present evidence of its robust asset value in the near future. The firm is expected to start generating significant cash flow, amounting to $200-$500 million by the end of 2024, which RBC believes will demonstrate the company's underlying asset value to investors.
RBC Capital's stance is to encourage buying Sunrun shares amidst the current market weakness, seeing it as an opportunity for investors. The firm's analysis suggests confidence in Sunrun's ability to overcome current financial pressures and emerge with a strong demonstration of its value proposition to customers and investors alike.
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