RBC Capital Markets Downgrades Sunrun (RUN) PT to $5 Over Recent US Senate Proposal

Sunrun Inc. (NASDAQ:RUN) is one of the best small cap tech stocks with biggest upside potential. On June 18, RBC Capital Markets downgraded Sunrun from Outperform to Sector Perform and halved its price target from $12 to $5. The adjustment was prompted by concerns over a recent US Senate proposal that signals the potential elimination of Section 25D residential solar leasing tax credits.

While the proposed Senate reconciliation bill preserves tax credits for battery storage, which accounts for ~70% of Sunrun’s installations, the solar portion of these systems, which represents less than 30% of the installation value, would no longer qualify for subsidies. RBC analysts believe that without these subsidies, Sunrun’s offerings may struggle to compete with conventional utilities across most US regions.

RBC Capital Markets Downgrades Sunrun (RUN) PT to $5 Over Recent US Senate Proposal

A field of solar panels glistening in the afternoon sun, symbolizing the company’s renewable energy ambitions.

This competitive disadvantage could only be mitigated by declines in interest rates or system costs, or increases in utility prices. RBC also highlighted the elevated soft costs in the US solar market, including high sales and marketing expenses, permitting fees, and overheads. Still, the company was able to generate $56 million in cash in Q1 2025, which marked its 4th consecutive quarter of positive cash generation.

Sunrun Inc. (NASDAQ:RUN) designs, develops, installs, sells, owns, and maintains residential solar energy systems in the US.

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Disclosure: None. This article is originally published at Insider Monkey.