Key Takeaways
- Goldman Sachs cut its Sunrun price target to $11 from $13 on Oct. 8 and kept its Buy rating. The new target is [44%] above the Oct. 7 close.
- Citi cut its target to $14 from $16 the same morning and also kept its Buy rating.
- Analysts expect normalized EPS to fall from $1.71 in fiscal 2025 to $1.00 in fiscal 2027.
- At $11, Sunrun would trade at about 12.1x forward earnings, up from [8.4x] today, even as those earnings shrink.
Sunrun (RUN) closed at [$7.61] on Oct. 7, a fresh 52-week low and [64.5%] below its Jan. 28 closing high of $21.41. On the morning of Oct. 8, Goldman Sachs analyst Brian Lee cut his price target to $11 from $13 and kept his Buy rating. Citi trimmed its target to $14 from $16 the same morning, also keeping a Buy. Both cuts point to lower expectations for near-term cash generation and growth, and the stock slipped about 2% before the open, to $7.46.
Goldman’s new target still sits [44%] above the Oct. 7 close. But Lee started May at $20, and today’s cut is his fourth since then, including a $15 to $13 cut on Sept. 21. Four cuts, one rating.
How Sunrun Got Here
It started with second-quarter results on Aug. 5. Subscriber additions fell 31% from a year earlier, and Sunrun cut its 2026 Cash Generation guidance (its own cash measure) to $200 million to $375 million, from $250 million to $450 million. That’s an 18% cut at the midpoint.
CFO Danny Abajian blamed “reduced affiliate channel volumes, a delayed ramp in direct sales activities, and modestly higher capital costs than previously forecasted.”
High borrowing costs added pressure. On Sept. 28, Barron’s tied the slide in solar and wind stocks to high borrowing costs.
Why Goldman Still Says Buy
Lee has highlighted Sunrun’s battery-storage opportunity. On Sunrun’s Aug. 5 earnings call, comparing Sunrun with a company that only does batteries, he told management “the valuation delta versus you seems pretty stark.”
Sunrun had 4.6 GWh of networked storage at June 30, and CEO Mary Powell has set a goal of more than 10 GWh by the end of 2028. That’s more than double in two and a half years.
The rest of the Street hasn’t walked away either. On Oct. 7, 8 analysts rated the stock Buy, 3 Outperform and 9 Hold, and the Underperform and Sell ratings from a year ago were gone.
Does $11 Add Up for Sunrun Stock?
Belief and price targets are different things. The mean target has slid to $16 from about $23 in late February, and the lowest target is now $9.
The earnings are the problem. Analysts expect normalized EPS to fall from $1.71 in fiscal 2025 to $1.36 this year and $1.00 in fiscal 2027, then sit at $1.01 in 2028. That’s a 42% drop in two years.
Now the math. At [$7.61] and [8.4x] forward earnings, Sunrun is priced on about $0.91 of earnings per share over the next 12 months. Divide Goldman’s $11 by $0.91, and the target implies 12.1x.
The stock’s own history can’t say whether that’s fair. Its five-year average of 219.2x and its low of -681.8x come from stretches when forward earnings were near zero or negative.
The Debt Cuts Both Ways
The bear case is the balance sheet. Sunrun carried $14.0 billion of long-term non-recourse debt at June 30, nearly 8x its [$1.8 billion] market value, so higher rates cut into what each new customer is worth.
The bull case sits inside the same guidance cut. Even at the reduced midpoint of about $288 million, Sunrun’s market value is roughly 6.3x this year’s expected Cash Generation. (That’s Sunrun’s own measure, not free cash flow.)
Since both Goldman and Citi cut on near-term cash and growth, I wouldn’t count on those EPS estimates rising before the next report.
Sunrun’s Nov. 4 Report Has to Show Growth
My view: Goldman’s $11 is plausible. A 12.1x multiple is hardly rich for a company valued at about 6x its own cash guidance. The catch is that investors have to pay more for earnings analysts expect to shrink, so the direct business has to prove it’s growing again. Abajian said in August that he expects direct installs to grow more than 10% in the second half from a year earlier.
Sunrun reports third-quarter results after the close on Wednesday, Nov. 4. If the Q3 report shows direct installations on track for more than 10% second-half growth and supports the $200 million–$375 million full-year Cash Generation outlook, excluding equipment safe-harbor investments, that would strengthen my case for $11. If management lowers the full-year outlook below $200 million, I’d expect further pressure on Lee’s target.
You can pull up the same target history, EPS estimates and forward P/E chart for Sunrun on TIKR for free, and check them again after Nov. 4. Learn more here.
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Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
