Sunrun (RUN) - Get Report is "the leading player in the rapidly growing U.S. rooftop solar market," RBC Capital says, initiating coverage of the solar-energy company with an outperform rating and $81 price target.
Shares of the San Francisco company at last check were off 1.1% at $55.63. They have also traded on Wednesday up as much as 3.4% at $58.12.
The price target indicates 44% potential upside from Tuesday's closing price.
Analyst Elvira Scotto said in a research note that Sunrun "has roughly 25% of the total residential rooftop market, and its size, scale and brand provide advantages for acquiring customers and securing better financing."
Scotto said she saw continued growth in rooftop solar as solar-module costs decline and "home battery options and virtual power plant agreements provide additional growth opportunities for RUN."
Sunrun's leadership position provides the company access to low-cost tax equity to finance its growth, she said. "[Tax] equity funds prefer financially healthy sponsors with geographic diversity and proven execution, which RUN offers," she wrote.
The analyst said current pricing coupled with supportive state and federal incentives "make rooftop solar a competitive alternative to traditional utilities."
In addition, Scotto said, power outages from more frequent extreme weather conditions, such as in California and Texas, have increased demand for the reliability that Sunrun's solar-plus-storage option provides.
The company offers both residential rooftop solar and battery storage in every state in which it operates except Wisconsin.
"The market for residential rooftop continues to grow," Scotto said. "In 2020, the installed base of residential rooftop solar capacity was more than 19 gigawatts, up from around 16 GW in 2019 and around 13 GW in 2018. Industry sources project continued installation growth."
Last month, a number of analysts came out in support of the company.
Susquehanna Financial analyst Biju Perincheril initiated coverage of Sunrun with a positive rating and $75 price target.
Goldman Sachs analyst Brian Lee upgraded the company to buy from neutral.
And Morgan Stanley's Stephen Byrd upgraded the company to overweight from equal-weight, while cutting his price target on to $86 from $89.