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On Friday, UBS analyst Jon Windham adjusted the price target for Sunrun (NASDAQ:RUN) stock, bringing it down to $12.00 from the previous $17.00, while still maintaining a Buy rating on the company. Currently trading at $6.85, Sunrun’s stock has experienced significant volatility, with analyst targets ranging from $4 to $20. InvestingPro analysis shows the stock has declined over 52% in the past year. The revision follows the recent passage of the U.S. House budget bill on May 22, 2025, which is set to phase out the Investment Tax Credit ( ITC (NSE:ITC)) for residential solar projects.
The budget bill stipulates the elimination of the residential homeowner credit (25D) after 2025 and the investment tax credit (48E) for all projects that either start construction more than 60 days after the bill is signed into law or are placed in service after 2028. The ITC has been a significant factor in reducing electricity costs for homeowners investing in rooftop solar systems.
Windham noted that the removal of these tax credits is expected to lead to a considerable decrease in annual solar installations. Despite the price target reduction, UBS’s estimates for Sunrun remain unchanged, as there is still a possibility for amendments in the U.S. Senate and chances that the final bill may not pass.
UBS also pointed out that, according to their interpretation, the current bill might allow residential solar projects to continue benefiting from the ITC through pooled residential Power Purchase Agreements (PPA), aligning with Sunrun’s existing strategy. The maintained Buy rating and new price target are based on Sunrun’s underlying portfolio of contracted net earning assets, valued at approximately $2.6 billion.
Windham further mentioned that there could be potential upside scenarios for Sunrun that are not directly related to the U.S. budget bill. The firm’s stance suggests a belief in the resilience of the company’s business model and potential growth opportunities despite legislative changes. With revenue of $2.08 billion in the last twelve months and analysts expecting net income growth this year, investors seeking deeper insights can access comprehensive analysis and 14 additional ProTips through InvestingPro’s detailed research reports, available for over 1,400 US stocks.
In other recent news, Sunrun has been the focus of various analyst updates and legislative discussions that could impact its business model. Goldman Sachs has raised its price target for Sunrun to $15, maintaining a Buy rating, citing a favorable outlook on potential tariff and policy relief. In contrast, BMO Capital Markets downgraded the stock to Underperform and lowered the price target to $4, attributing the change to concerns over legislative revisions that may affect solar Investment Tax Credits. Jefferies also reduced its price target to $6 while maintaining a Hold rating, highlighting the importance of potential Senate decisions on residential leases. Meanwhile, UBS increased its price target to $17, reflecting optimism about proposed renewable tax credit policy changes. JPMorgan reiterated a $13 target, noting that Sunrun views recent legislative proposals as workable, despite some reduction in ITC incentives. These developments underscore the significant influence of policy changes on Sunrun’s financial outlook and strategic positioning in the renewable energy sector. Investors are closely monitoring these legislative and market dynamics as Sunrun navigates potential opportunities and challenges.
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