Energy
Wednesday, August 7th, 2024 2:55 pm EDT
Key Points
- Sunrun’s Stock Surge and Market Opportunity: Sunrun’s stock increased nearly 14% following SunPower’s bankruptcy filing, as Sunrun views this as an opportunity to gain market share. The company is engaging with former SunPower dealers and has hired former SunPower executives to drive growth in the new homes segment.
- SunPower’s Financial Troubles: SunPower filed for bankruptcy due to prolonged struggles with high interest rates and allegations of misconduct. The company had already stopped new leases, installations, and product shipments earlier in the year.
- Positive Performance and Outlook for Sunrun: Sunrun posted a surprise profit for the second quarter, exceeded revenue expectations, and set a cash generation forecast of $350 million to $600 million for 2025. Goldman Sachs raised its 12-month stock price target for Sunrun, reflecting a 21% potential upside. Despite a 4% year-to-date decline, Sunrun’s stock has risen 55% over the past month.
Sunrun’s stock surged nearly 14% on Wednesday, buoyed by the bankruptcy filing of its competitor, SunPower. Sunrun CEO Mary Powell highlighted the company’s strategic advantage, noting that Sunrun is actively engaging with former SunPower dealers to expand its market presence. This move is part of Sunrun’s broader strategy to capitalize on the shifting dynamics in the rooftop solar industry and further solidify its leadership position while maintaining financial discipline.
SunPower, which filed for bankruptcy earlier this week, has faced ongoing challenges due to high interest rates and allegations of misconduct related to its reporting practices. The company had already ceased new leases, installations, and product shipments by July, further exacerbating its financial woes. In contrast, Sunrun has posted a surprise profit for the second quarter and exceeded Wall Street’s revenue expectations. The company is optimistic about its future, setting a cash generation forecast of $350 million to $600 million for 2025.
In a move to bolster its new homes business segment, Sunrun has hired two former SunPower executives, Matt Brost and Ellen Struck, signaling its commitment to strategic growth. Goldman Sachs responded positively to Sunrun’s performance, raising its 12-month stock price target to $20 per share, suggesting a potential 21% increase from Tuesday’s closing price of $16.49. This positive outlook is supported by Sunrun’s recent strong cash flow, which is expected to facilitate continued market share gains.
Despite the recent surge, Sunrun’s stock is still down about 4% for the year, although it has risen 55% over the past month. In comparison, the Invesco Solar ETF (TAN) has only increased by nearly 2% over the past month but remains down about 24% year-to-date. This contrast underscores Sunrun’s relative outperformance amidst broader industry challenges.
For the full original article on CNBC, please click here: https://www.cnbc.com/2024/08/07/sunrun-stock-surges-as-it-sees-opportunity-after-sunpower-files-for-bankruptcy.html
