Sunrun Shares Upgraded to Outperform with New Policy Clarity

RBC Capital Markets upgraded Sunrun to Outperform and raised its price target to $16, citing long-term policy clarity on solar tax rules and domestic content requirements. The brokerage believes Sunrun has better certainty to scale installations and improve cash generation, with over 20% year-on-year growth in 2026 and a 15% cash yield to 2026. The stock is undervalued relative to long-term growth potential.

RBC Capital Markets has upgraded Sunrun Inc. (NASDAQ: RUN) to Outperform and raised its price target to $16, citing long-term policy clarity on solar tax rules and domestic content requirements. The brokerage believes Sunrun has better certainty to scale installations and improve cash generation, with over 20% year-on-year growth in 2026 and a 15% cash yield to 2026. The stock is undervalued relative to long-term growth potential [1].

The upgrade reflects RBC's view that Sunrun deserves a multiple rerating due to increased certainty about long-term opportunities following Treasury guidance clarification. According to InvestingPro data, while analyst targets range from $9 to $25, investors should note the company operates with significant debt and rapid cash burn [4].

RBC Capital noted that changes to OB3 guidance have positive implications for Sunrun’s business model, while clarity on commence construction rules for the Investment Tax Credit (ITC) and Production Tax Credit (PTC) further derisk the company’s longer-term growth outlook and value proposition [4].

The new price target implies approximately a 15% cash generation yield to 2026, which RBC believes falls within Sunrun’s historical range. The firm’s analyst Christopher Dendrinos made the rating change as part of his assessment of Sunrun’s improved business outlook following the regulatory clarifications [4].

Sunrun is also expected to benefit from the expiration of the federal 25D tax credit for customer-owned systems at the end of 2025. This could push more demand into third-party-owned solar systems (TPO), where Sunrun is the market leader. RBC estimates nearly half of residential demand still comes from non-TPO systems today, but those installers may need to shift toward leasing or partner with Sunrun once the incentive expires [1].

RBC projects Sunrun will add around 139,000 customers in 2026, roughly 20% year-on-year growth, with cash generation rising to about $550 million, up from $308 million in 2025 [1]. Analysts see further upside from lower customer acquisition costs, storage adoption, and higher electricity rates [1].

The stock is currently trading at $13.92, with a 20% gain in the past week and over 57% surge in the last six months [4]. Sunrun reported strong second-quarter earnings, with revenue reaching $569.3 million, marking an 8.7% increase compared to the previous year and surpassing consensus estimates of $559 million [4].

References:
[1] https://finance.yahoo.com/news/sunrun-long-term-policy-clarity-134215407.html
[2] https://www.cnbc.com/2025/08/18/rbc-capital-markets-upgrades-this-solar-stock-to-outperform-following-tax-credit-clarification.html
[3] https://ca.finance.yahoo.com/news/sunrun-long-term-policy-clarity-134408907.html
[4] https://ca.investing.com/news/analyst-ratings/sunrun-stock-rating-upgraded-to-outperform-by-rbc-capital-on-itc-clarity-93CH-4163657