GLJ Research Downgrades Sunrun (RUN) to Sell

GLJ Research analyst Gordon Johnson downgraded Sunrun (NASDAQ: RUN) from Hold to Sell with a price target of $7.78.

The analyst comments "We Downgrade SunRun to SELL on Donald Trump’s U.S. Presidential Victory. With a new IRS Commissioner imminent, we move our rating on SunRun to SELL and re-introduce our 2024E year-end price target of $7.78/shr, or -34.6% from yesterday’s closing price. In what follows, we detail why we believe the Trump Administration poses an existential threat to RUN’s ability to stay solvent, using SunPower (SPWR; SELL) as a recent example. SunRun’s Ability to Overclaim ITC Tax Credits (i.e., a lynchpin of its core business) Appears at Significant Risk in Trump’s Pending Administration. At present, in addition to the wildly aggressive assumptions RUN uses to calculate fair-market-value (“FMV”) – i.e., the 6% discount rate it uses, despite raising debt above this rate recently + a 0% default rate on all the consumer loans its ever extended + 90% renewal rates 20-30yrs into the future on technology that will be obsolete + no cost for roof removal – it uses recursive math to claim an investment tax credit (“ITC”). Combined, RUN’s questionable math serves to inflate the value of its systems by +78.8%, to as high as +213.0% (when applying the “adders” that came with the Inflation Reduction Act [“IRA”]) – Ex. 1. In fact, with respect to the recursive math the company employs (i.e., taking an ITC on the ITC), in its response to a MuddyWaters report, RUN, de facto, admits this is “industry standard” (Ex. 2)."

For an analyst ratings summary and ratings history on Sunrun click here. For more ratings news on Sunrun click here.

Shares of Sunrun closed at $11.90 yesterday.

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