Sunrun downgraded to Sector Perform from Outperform at RBC Capital

RBC Capital downgraded Sunrun (RUN) to Sector Perform from Outperform with a price target of $5, down from $12. The Senate reconciliation bill preserves similar language to the House including the proposed elimination of tax credits for residential solar leasing, the analyst tells investors in a research note. The firm says that while credits are still preserved for storage, which is 70% of Sunrun’s customer base, it is challenging to see a path to positive cash generation under the current industry cost structure. Europe is a proxy for how residential solar can compete without subsidies, and RBC recommends moving to the sidelines “as cost structure and demand recalibrate,” the analyst says. The firm moving to price-to-book from a cash generation based multiple given Sunrun’s “more limited visibility.”