RBC Capital Markets has taken a conservative stance on Sunrun by downgrading its stock rating from ‘outperform’ to ‘sector perform’ following a significant decline in the company’s stock value. Analyst Christopher Dendrinos reduced the price target for Sunrun by $7 to $5, indicating a potential downside of 13.5% from the previous day’s close.
This decision comes in the wake of a sharp drop in solar stocks, which plummeted after investors tried to understand the implications of a reconciliation bill in the U.S. Senate on the solar industry. Sunrun experienced its largest single-day loss ever, plummeting about 40%. The primary concern stemming from the Senate bill is its language regarding the potential elimination of tax credits for residential solar leasing. Despite this, Dendrinos notes that approximately 70% of Sunrun’s customers are involved with storage, which should still be eligible for tax credits.
However, Dendrinos expressed concerns about Sunrun’s ability to achieve positive cash generation under the current cost structure of the solar industry. He argued that in order for customers to switch to residential solar, prices would need to be reduced by at least 10% to 20% below current utility rates—an outcome he believes is unlikely to happen. He stressed the importance of evaluating the longer-term value proposition for Sunrun, particularly concerning cash generation, which could be severely impacted by the removal of solar tax credits.
Despite the challenges ahead, Dendrinos mentioned that Sunrun’s scale and market position may offer some competitive advantages in navigating the tough industry landscape. He acknowledged the need for austerity measures across the sector as companies adapt to a changing environment.
On the trading front, Sunrun shares fell nearly 3% in pre-market trading on Wednesday and have seen a steep decline of 37.5% in 2025, positioning the company to potentially mark its fifth consecutive year of losses.
It’s important to keep a vigilant eye on legislative developments as they relate to the solar industry, as these could significantly impact the financial health of solar companies, including Sunrun. A hopeful perspective would be that reform and innovation in sustainable energy solutions could emerge as legislation evolves, possibly leading to improved business conditions in the future.