Of the eight analysts covering Sunrun (RUN) stock, six analysts, or 75%, gave the company a “buy” rating. Two analysts, or 25%, rated it a “hold.” There weren’t any “sell” rating on Sunrun’s stock.
Sunrun’s target price
Since the release of Sunrun’s 4Q15 results, three of the eight analysts covering the stock lowered the price target. There weren’t any upward revisions. Sunrun’s consensus 12-month target price is $13.13. This indicates a nearly 76% return potential considering a $7.45 closing price on May 4, 2016.
Analysts expect Sunrun to report muted 1Q16 earnings. They see a 16% decrease in consolidated revenue on a quarter-over-quarter basis and a nearly 68% increase compared to the revenue in 1Q15. Sunrun is in its growth phase and is a rapidly growing company.Therefore, it is reasonable to compare quarter-over-quarter data rather than year-over-year results.
For 1Q16, analysts expect a marginal increase in its EBITDA (earnings before interest, tax, depreciation, and amortization) and EBITDA margins. This is in line with the company’s continued focus on cost reductions and increasing operational efficiency across revenue generating segments. As of December 31, 2015, Sunrun’s per watt installation cost was higher than its peers SolarCity (SCTY) and Vivint Solar (VSLR).
Also, analysts expect Sunrun to report a net loss of $49.6 million compared to $15 million in 4Q15, primarily due to lower revenues.
Among the major downstream solar (TAN) companies, analysts recommend a “buy” for Sunrun. The recommendation was primarily due to the company’s aggressive growth rate in the residential solar sector and diversification in its business.
Among the eight firms covering Sunrun stock, Morgan Stanley (MS) gave an “overweight” recommendation on the stock with a price target of $19 on March 14, 2016. Credit Suisse gave an “outperform” recommendation on the stock with a price target of $18 on May 2, 2016. However, Goldman Sachs (GS) gave a “neutral” recommendation and Barclays has an “equal weight” rating on the stock with both the firms having a price target of $7.
In the next part of this series, we’ll analyze analysts’ 1Q16 revenue estimates for Sunrun. We’ll find out whether these recommendations are conservative or optimistic.