Sunrun Inc (NASDAQ:RUN) shares rallied on Tuesday following bullish comments from Goldman Sachs analyst Brian K. Lee, in a research note released earlier. Lee raised his price target on RUN to $10.00 (from $9.00), while reiterating a Buy rating, after adding an M&A component to his valuation methodology.
Lee wrote, “While public M&A in residential solar has been limited to TSLA’s purchase of SCTY, we note RUN trades below tangible book value following underperformance in the past year. Additionally, we see increased restructuring potential in residential solar business models owing to the industry’s growing mix shift to cash/loan offerings vs. leases/PPAs – a tenet of the TSLA-SCTY deal as stated by management – that has the impact of increasing cash flow/EBITDA for companies embracing this shift. Assuming this mix shift persists or is further accelerated by a potential buyer, our hypothetical sensitivity analysis suggests potential returns above 15% for a financial acquirer.”
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Brian K. Lee has a yearly average return of 1.7% and a 46% success rate. Lee has a 5.7% average return when recommending RUN, and is ranked #2184 out of 4573 analysts.
Out of the 9 analysts polled by TipRanks (in the past 12 months), 7 rate Sunrun stock a Buy, while 2 rate the stock a Hold. With a return potential of 54%, the stock’s consensus target price stands at $9.94.