Sunrun Stock (NASDAQ:RUN) Upgraded On Strong Growth Setup, Price Target Soars

Sunrun Inc. (NASDAQ: RUN) has seen its stock garner renewed favor, fueled by positive analyst sentiment and favorable policy developments. The recent shift in analyst perspective and encouraging financial performance have contributed to a notable uptick in market confidence.

Following a series of adjustments, Jefferies upgraded Sunrun's rating to ‘Buy' from ‘Hold', simultaneously raising the price target significantly to $21 from the previous $11. This upgrade is underpinned by expectations of substantial cash generation in the second half of the year and a robust growth trajectory extending into 2026. The firm's analysis points to Sunrun's leading position as a residential solar third-party owner (TPO) in the U.S. market as a key advantage, particularly as the competitive landscape narrows and the 25D tax credit nears its expiration. Jefferies anticipates Sunrun's growth rate to reach the high-single digits to teens range by 2026, positioning the company to capitalize on evolving market dynamics.

This upgrade marks a significant turnaround from earlier this year, when Jefferies had downgraded Sunrun to ‘Hold' in March, citing concerns about the residential solar market's recovery and uncertainties surrounding the Inflation Reduction Act (IRA). The price target was drastically reduced at that time, reflecting a cautious outlook. Prior to this downgrade, in January 2025, Jefferies had reduced Sunrun's price target while maintaining a ‘Buy' rating, awaiting a promising quarter with efficient cash generation, even amidst residential solar market challenges and IRA uncertainties.

Recent policy developments have also played a crucial role in shaping Sunrun's stock performance. A Senate proposal in June 2025, aiming to phase out federal tax credits for solar and wind energy by 2028, initially triggered a decline in solar stocks, including Sunrun. However, the subsequent passage of the One Big Beautiful Bill Act (OBBBA) in July 2025, which provided favorable guidance for residential solar companies, had a positive impact. The OBBBA allowed companies to claim tax credits through 2027 for solar leases and through 2035 for storage, benefiting third-party ownership models like Sunrun's and contributing to the recent upgrade and stock price increase.

The company's financial performance in the first quarter of 2025 further bolstered investor confidence. Sunrun reported revenue of $504.3 million, exceeding estimates and representing a 10% year-over-year increase. Net income reached $50 million, or $0.22 per share, a significant improvement from the previous year's net loss. The company also reported cash generation of $56 million, marking the fourth consecutive quarter of positive cash flow. Aggregate Subscriber Value reached $1.2 billion, reflecting a 23% year-over-year increase.

The combination of positive analyst ratings, supportive policy developments, and strong financial performance has created a favorable environment for Sunrun. The recent upgrade by Jefferies underscores the firm's confidence in Sunrun's growth prospects and market leadership. Whether Sunrun can maintain this momentum will depend on its ability to execute its growth strategy and navigate the evolving regulatory landscape, shaping future market sentiment.