Sunrun's Mixed Q2 Outcomes: KeyBanc Revises Price Target Amid Challenges And Steady Customer Growth Prospects

KeyBanc Capital Markets analyst Sophie Karp reiterated the Overweight rating on Sunrun Inc. RUN, lowering the price target to $24 from $27.

Sunrun reported mixed Q2 results earlier this month, where revenue missed the estimates while earnings beat the same.

The analyst notes that RUN's Q2 performance saw satisfactory customer growth and lower revenues/cash flow generation as the company continued to navigate a gradual recovery in CA demand and post-inflationary working capital hangover.

RUN is sticking to its original 2023 guidance as prior cautious optimism exhibited by the industry in Q1 has not materialized, leading the analyst to pare back 2023 estimates, Karp adds.

However, higher battery attach rates (>80% reported in CA), and the overall recovery in demand in the state is a welcome sign—adding higher-value customers will, over time, translate into more significant margins and NPVs, the analyst adds.

While RUN's long-term fundamentals remain unchanged, short-term challenges lead to the price target cut.

For Q3, Karp reduced revenue estimates from $755 million to $620 million. For FY23, the analyst reduced revenue estimates from $2.852 billion to $2.450 billion.

For FY24, the analyst lowered estimates from $3.453 billion to $3.204 billion.

Price Action: RUN shares are trading lower by 1.88% to $14.60 on the last check Thursday.