It's been a rising tide of positive analyst sentiment for SunRun (NASDAQ:RUN) lately, and the latest word out of Goldman Sachs only cements the perspective. The analyst recently put an upgrade on the stock thanks to a slate of factors and factors that will prove surprisingly familiar. This solar power juggernaut has already made an exciting run-up, and may have still more room to generate value as well as electricity.
Goldman Sachs' Familiar Upgrade
Goldman Sachs took SunRun up from “neutral” to “buy”, thanks to the combination of the stock's current valuation and its rapidly-gaining growth. As the company is the current leader in US residential solar power installations, reports note, that means any changes in solar power demand are likely to be most immediately felt therein. Just yesterday, Susquehanna Financial started covering SunRun, and put in a “positive” rating on the strength of the same factors that led to an upgrade at Goldman Sachs.
The analyst gains come at an unusual time for SunRun, as it's been seen actively shedding valuation. While the company is currently nearly six-fold over this time last year, reports note, it's also down about 20% so far this year. There are even some signs that the 60-day moving average, which was formerly kept as a floor, could ultimately become a ceiling if things keep going as they're going.
Analysts Are Backing the Truck Up
While there are some unpleasant technical issues currently in play for SunRun, it's not slowing the broader analyst pool from recommending SunRun frantically. Our latest research shows a path of steadying improvement toward bullishness for SunRun, through the pandemic and beyond.
Even as far back as a year ago, SunRun was already pretty heavily recommended. The company had eight “buy” ratings, and nothing else. No “hold”, “sell”, or even “strong buy” to be seen. Fast forward six months, and the company remained at eight “buy” but added one “hold”, making it just a bit less bullish. A month ago, meanwhile, the company then had 13 “buy” ratings but only three “hold” ratings. Today, it's only gotten more bullish as the company stands at 15 “buy” ratings and three “hold”, making for a substantial “buy” recommendation.
The average price target, meanwhile, has slipped a bit in recent days, but is up significantly over this time last year. The current average is running at $79.28, which is well, well above the one-year-ago price of $11.16. However, it's also down from its highs; a little over two months ago, the average stood at $96.50. While there are still some targets that reflect such pricing today—the current high is $116—there are also those who are looking for a steep drop, like the current low of $55. Given that SunRun currently sells at $58.09, there's either a lot of upside potential or a lot of optimists who haven't given up the ghost just yet.
Now Installing in Suburbia, and Disturbia
There are some points about SunRun that are likely to leave potential investors disquieted. Insider selling is likely to be a distressing point, as several big names in the company are dropping shares. Jeanna Steele, the company's general counsel, recently sold 1,589 shares of a previously-held 122,267. The company's CAO sold a similar 1,645 shares, and recent reports noted that the company's COO, Christopher Dawson, also dropped 12,936 shares. The CEO, Lynn Michelle Jurich, also recently sold 33,814 shares. While there are always multiple explanations for an insider selling stock, it's never a welcome sight; why would insiders sell stock in a company that was likely to improve in the short-term?
However, there are also clear positives. Demand for solar power is likely to increase thanks to the Biden administration, and incentives for clean power are likely to increase in the meantime. Moreover, there's likely to be further demand from the residential sector; between California's occasional wind-driven blackouts and the recent Texas frozen nightmare, having a way to generate power at home when the grid can't keep up is likely to be on a lot of homeowners' minds. Throw in the recent housing boom, and the fact that there are more homeowners—and fewer renters—certainly can't hurt matters much.
This rising tide will likely have some impact on lifting boats, including SunRun's, but SunRun also isn't short of competition. A rising tide will lift most, if not all, boats, and SunRun will have to make a solid case to potential homeowners. It will also have to engage in a lot more marketing, and with stock prices well above last year's figures but also well off highs seen just a couple months ago, SunRun may have trouble getting together the war chest required. Investing in solar power is likely a good idea, but keep a close watch on SunRun before making the move in.
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