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On Tuesday, Deutsche Bank (ETR:DBKGn) reiterated its Buy rating for Sunrun (NASDAQ:RUN) shares, maintaining a price target of $10.50. The stock currently trades at $6.17, with analyst targets ranging from $8 to $38. According to InvestingPro data, the stock is currently trading near its 52-week low of $6.00, and technical indicators suggest it may be oversold. The firm’s analyst recognized the solar industry’s challenges throughout 2024, which have persisted into 2025, including a tough macroeconomic environment and potential threats from the new US administration to the current favorable regulatory framework.
Despite these headwinds, Sunrun has been commended for its ability to navigate the industry’s challenges effectively, distinguishing itself from its direct competitor, NOVA, which has shown lagging performance. While Sunrun has produced three consecutive quarters of positive cash generation in 2024 and anticipates maintaining this momentum in each quarter of 2025, InvestingPro analysis reveals the company’s overall financial health score is currently rated as WEAK, with particular concerns about cash flow management. InvestingPro subscribers have access to 16 additional key insights about Sunrun’s financial position.
The company has taken strategic financial steps, such as extending its corporate debt maturities, with the next debt due by 2030, amounting to approximately $500 million. In addition, Sunrun secured $7 billion in capital in 2024. However, InvestingPro data shows the company operates with a significant debt burden, with a debt-to-equity ratio of 5.09x. The company generated revenue of $2.04 billion in the last twelve months, though this represents a decline of about 10% year-over-year. The company also saw an increase in its Investment Tax Credit ( ITC (NSE:ITC)) sales tax to an average of around 40% in the fourth quarter of 2024, up from 36% in the first quarter of the same year.
Sunrun also appears to have capitalized on the bankruptcy of Sunpower last summer, expanding its dealer network. While acknowledging that Sunrun is not completely shielded from macro risks, including possible changes to the US regulatory framework that could impact ITCs, the analyst believes that Sunrun’s management team has shown greater efficiency in dealing with industry challenges compared to NOVA.
Looking ahead to 2025, the analyst expects Sunrun to continue meeting or exceeding expectations and to potentially gain further momentum as an established industry leader. InvestingPro indicates that analysts expect net income growth this year, with the company projected to return to profitability. Get detailed insights and access to Sunrun’s comprehensive Pro Research Report, along with 1,400+ other top stocks, through an InvestingPro subscription. In the event of another competitor’s bankruptcy, Sunrun is anticipated to be well-positioned to expand its dealer network and access to new customers. Sunrun is scheduled to report its first-quarter results of 2025 in early May, and these results could benefit from market disruptions among peers, presenting a potential catalyst opportunity for investors.
In other recent news, Sunrun Inc . reported its fourth-quarter 2024 earnings, which significantly exceeded analysts’ expectations. The company achieved an earnings per share of $1.41, contrasting with the anticipated loss of $0.27, although revenue fell short at $518.5 million against the forecasted $544.85 million. Sunrun also reported positive cash generation for the third consecutive quarter, with a total cash reserve of $947 million at the end of the period. Additionally, the company expanded its customer base to 1 million, including 889,000 subscribers, and increased its annual recurring revenue by 23% year-over-year to over $1.6 billion.
In other developments, Mizuho (NYSE:MFG) Securities revised its price target for Sunrun’s stock from $18.00 to $15.00, maintaining an Outperform rating. The adjustment reflects challenges such as increased competition, rising capital costs, and supply chain constraints, impacting Sunrun’s future projections for installations and cash generation. Despite these hurdles, Mizuho remains optimistic about Sunrun’s market position and potential tax credit benefits. Sunrun’s strategic focus on high-value markets and storage-first solutions continues to position it as a leader in the residential solar and storage market.
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