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Investing.com - GLJ Research upgraded Sunrun (NASDAQ:RUN) from Sell to Hold on Friday, citing favorable U.S. Treasury guidance for the residential solar sector. The stock, currently trading at $13.90, has shown significant volatility with a 46% decline over the past year, according to InvestingPro data.
The upgrade follows the Treasury Department’s release of new guidance that GLJ Research describes as positive news for residential solar companies. According to the firm, many industry observers had expected the Trump administration to eliminate a tax credit loophole. This development could be crucial for Sunrun’s financial outlook, as InvestingPro analysis shows the company operates with a significant debt burden and currently faces cash flow challenges.
The loophole in question allows residential solar companies to claim tax credits for projects several years into the future, with a potential Safe Harbor cutoff date of August 17, 2025.
GLJ Research notes that contrary to these expectations, the Trump administration’s Treasury Department did "the opposite" of restricting these tax benefits in its latest guidance.
The firm’s analyst Gordon Johnson had previously maintained a Sell rating on Sunrun stock before this policy development prompted the upgrade to Hold.
In other recent news, Sunrun’s second-quarter earnings report revealed a revenue of $569.3 million, marking an 8.7% year-over-year growth and surpassing consensus estimates of $559 million. Mizuho responded to Sunrun’s strong performance by raising its price target to $25, citing the company’s success in exceeding expectations for solar and storage additions and an increase in its contracted net value creation margin. UBS also adjusted its price target to $16, reflecting revised forecasts for Sunrun’s solar capacity deployments for the coming years. Freedom Broker increased its price target to $14.50, maintaining a Hold rating, following the earnings release. Wells Fargo updated its price target to $14, emphasizing a new valuation framework based on cash generation and terminal value. BMO Capital raised its target to $10, although it maintained an Underperform rating, noting strong performance in key areas but highlighting a shortfall in quarterly cash generation. These developments reflect a range of analyst perspectives on Sunrun’s recent financial performance and future potential.
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