Sunrun to trade toward ‘bear case’ if SenFin language holds, says Morgan Stanley

After the Senate Finance Committee introduced its version of the Budge Reconciliation bill, Morgan Stanley analyzed key proposed changes to the clean energy tax credits versus current law and the House version of the bill that passed in late May and said that residential solar is “still at a major disadvantage.” Residential solar leasing is not permitted under the Senate’s version of the bill, which is in line with the latest House bill, notes the analyst, who adds that if this language is not adjusted before the bill passes the Senate floor, the firm would believe Sunrun (RUN), SolarEdge (SEDG) and Enphase Energy (ENPH) will trade “towards our bear cases.” The firm has an Equal Weight rating on Sunrun shares and Underweight ratings on SolarEdge and Enphase. Conversely, the firm sees positive takeaways in the bill for Fluence Energy (FLNC) and large renewable developers NextEra Energy (NEE) and AES Corp. (AES) as well as for existing nuclear owners like Constellation Energy (CEG), Talen Energy (TLN), Vistra (VST) and PSEG (PEG), the analyst tells investors.