Sunrun stock will double off cost-saving catalysts: Analyst

Yahoo Finance2024-03-07

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💫 Short Summary

Sunrun's stock price target is raised due to expected growth in the residential solar market and lower costs of solar storage. Tax credits and adders provide additional upside, but competition from China remains a challenge. The Biden Administration's moratorium on solar panel inputs may impact US manufacturers, especially in an election year with differing clean energy priorities between Biden and Trump. Solar module manufacturers like First Solar are establishing manufacturing capacity in red States, influenced by Trump's job creation policies.

✨ Highlights

📊 Transcript

✦

Sunrun's stock price target is raised due to expected growth in the residential solar market and increased storage capacity.

00:30

The cost of solar storage is decreasing, benefiting Sunrun's margins.

Tax credits and adders offer additional upside for Sunrun, with potential for subscriber value increase.

Competition in the solar industry, particularly with China, poses a challenge.

The upcoming election year is seen as pivotal for the solar industry.

✦

Impact of Biden Administration's Solar Panel Tariffs Policy.

03:14

Moratorium on solar panel inputs from countries like Vietnam and Malaysia was implemented two years ago.

The moratorium is set to end in June 2024, potentially resulting in the reimplementation of tariffs.

Solar manufacturers in the US, including First Solar, may be affected, especially in an election year with contrasting clean energy priorities between Biden and Trump.

First Solar and other solar module manufacturers are establishing manufacturing capacity in red States, potentially influenced by Trump's policies on job creation.

00:02Jeff is Raising its price Target on Sun

00:05Run saying the company's stock price

00:06could double over the next 12 months the

00:08solar energy company expects to see a

00:10rebound from 2023 taking advantage of

00:13growth in the residential solar Market

00:15as it switches to solar energy storage

00:17let's bring in dant elani jeffy's us

00:19Renewables analyst to discuss more about

00:22the solar energy space good to have you

00:24on the show here so what are you seeing

00:26that's really got you enthused about

00:28where Sunrun could go from

00:30here sure so um um major markets in the

00:34US like in California they're going

00:36through a transition to a net metering

00:38policy that's basically incentivizing

00:41adoption of storage um in the fourth

00:43quarter for example storage attach rates

00:46for Sunrun were 45% versus 15% in the

00:50beginning of the year and then in 2024

00:53we expect uh sunr to increase the

00:55storage capacity by roughly 75% year on

00:57year and adding that storage is

01:00basically creative to Sun Run's uh net

01:02subscriber value by like several

01:06th000 and what about the cost of solar

01:09storage how have you seen those price

01:11dyn Dynamics affecting Sunrun versus say

01:13other solar companies so um the cost for

01:17stories of cost have been uh trending

01:19lower and U that's also um you know we

01:22see some upside to Sun Run um on that

01:27basically um you know um the company

01:30talked about lowering uh their Hardware

01:31costs which also includes you

01:33potentially storage as well by roughly

01:3518% so we are seeing those cost Trend

01:38lower and I think that's going to

01:39obviously add more margin upside to the

01:41company and in terms of the impact of

01:43the inflation reduction act some of

01:45these tax credits are we we seeing of

01:47the of those who have it available to

01:49them are they taking full advantage of

01:51it or is there still a lot more upside

01:53there uh for Sunrun there is definitely

01:55more upside to that so there are you

01:58know uh three

02:00kind of um adders that you know we can

02:02talk about for sun run one is just the

02:04domestic content Adder uh the low income

02:09Adder um and then as well as uh you know

02:12just a couple more adders for them so I

02:14think for uh you know specifically for

02:18Sunrun um you could see an additional uh

02:22you know uh like roughly $765 if they

02:26apply domestic content to it so I think

02:28uh that is yet play out for them in the

02:31subscriber value and I think that's

02:33where we see some upside as well and of

02:35course I have to ask you about

02:36competition with China I remember solar

02:39panel tariffs was one of the initial

02:40things that actually U ended up having

02:42that issue between the US and China at

02:45the very beginning of of the trade War

02:47here but how do you see competition in

02:48this space when it comes to solar

02:51now um I think that uh challenge is or

02:55that you know challenge is still there I

02:57think that competition is still there um

02:59this being an election year is very

03:01pivotal uh for the solar industry as

03:04well depending on you know U how tariffs

03:07play out on China uh the the Biden

03:09Administration they had placed um a

03:12moratorium on solar panel inputs uh two

03:15years ago um and that allowed um Imports

03:19of uh of panels into the US from

03:22countries like Vietnam Cambodia Thailand

03:24Malaysia and now that moratorium comes

03:26to end in um in June of 2024 this year

03:31so it's it's it's yet to see or play out

03:34how and you know what the administration

03:36does uh to um add back those tariffs but

03:39if they do add back those tariffs and

03:41that should be um a potential Catalyst

03:44for solar manufacturers uh in the or

03:47solar module manufacturers in the

03:49US and in terms of potential headwinds

03:52obviously being in an election year

03:54depending on who who ends up being

03:56president in terms of the push you have

03:58President Biden still pushing clean

04:00energy but then of course you have

04:02former president Trump really not

04:04invested not interested in investing on

04:06that side of it is that something that

04:07you've built into the base case as well

04:09from where Sunan goes from

04:11here um so um I think you know some of

04:15the uh you know push back that we get

04:18from you know um investors is is is you

04:20know what's going to happen to the IRA

04:22and I think there are many um you know

04:25conflicting views out there on what's

04:26going to happen with the IRA so I think

04:27that's kind of yet uh yet to play out

04:31but um if you look at well not

04:33necessarily you know sunron but you know

04:34some other solar panel manufacturers

04:36like First Solar for

04:37example uh they are manufacturing

04:40capacity they are establishing uh

04:43manufacturing capacity in red States

04:46like Alabama which are you know heavily

04:48tilting towards Trump so you know um

04:52when and if Trump comes um you know to

04:54power I think that's going to be you

04:56important to see how how he you know um

04:59what all what decisions he makes that

05:01could potentially impact jobs in red

05:03States

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