Sunrun stock downgraded by Barclays analysts to Equal Weight

Yahoo Finance anchors Seana Smith, Dave Briggs, and Brook DiPalma discuss shares of Sunrun falling more than 6% on Wednesday after Barclays analyst downgraded the stock to Equal Weight from Overweight and slashed its price target.

Video Transcript

DAVE BRIGGS: My play is Sunrun. Barclays sees cloudy days for the solar company ahead, downgrading the stock to equal weight from overweight and cutting the price target to $35 from $44.

Barclays saying in a note, quote, "US residential growth would be in the mid-teens range this year but could be more muted in '24." The Inflation Reduction Act, which President Biden signed into law last August, authorized $391 billion in spending on clean energy and climate-change initiatives over the next decade, but Sunrun has not been able to capitalize on that for the most part, now down more than 8% over the last 12 months, falling nearly 8% earlier today, and now has rallied a bit. Still down more than 6%.

The Invesco Solar ETF did see that upside, though. They saw it all, raising more than a quarter over the last year. It fell with Sunrun and basically the whole solar sector today.

It's interesting. I equate this and I talk a lot about the CHIPS Act, as you know. We all thought chips would benefit in the short term from the CHIPS Act. They did not. And for the large part, we saw the same thing with solar. And why they think that-- the theory is, Seana, is that it was a 10-year window. So the consumer knows I have 10 years to do this and still take advantage of the tax benefits, so why would I rush out and do this when it's spread out over 10 years? Not as much of an incentive.

SEANA SMITH: Exactly, and also, it could be a pretty costly decision too just in terms of the cost that you're paying upfront. So in this economic environment and people are pulling back on spending, maybe they're not as willing to kind of cough up all that money upfront in order to move into this space.

But I think it's interesting when you take a look at the Street's overall ratings on this stock because because of that weak performance in 2022, what you were talking about, there are still 19 buys when there are so many questions just about the uncertainty of the next couple of-- next couple of months, couple of quarters at least.

When you take a look at the fact that shares are just around $24 a share, I wouldn't be surprised if some of those 19 buys were downgraded to holds over the coming weeks given the clouded outlook that we will likely see from Sunrun.

- Yeah.

DAVE BRIGGS: I'm stuck on cheesecake. I really--

SEANA SMITH: It's hard to follow.

DAVE BRIGGS: My brained turned off.

SEANA SMITH: We were struggling today with our picks.

BROOKE DIPALMA: We didn't even have any cake. We just talked about it.

SEANA SMITH: Exactly.