This report is an updated version of the report published on 06 June 2022 at 10:29 AM New York Time, USA (GMT-4).

Sunrun Inc.

RUN Details

Sunrun Inc. (NASDAQ: RUN) is a home solar, battery storage, and energy services company. It was founded in 2007 with the objective of making local clean energy accessible to the people.

Result Performance for the period Q1FY22 ending 31 March 2022

• The company reported 27% growth in Solar Energy Capacity during the quarter. It installed 213 Megawatts of solar energy during the period, with 154 Megawatts being installed for Subscribers.
• The Group added 29,463 customers in Q1FY22, including 21,197 Subscriber additions.
• Gross earnings assets were at $10.2 billion as of 31 March 2022, and net earnings assets at $4.5 billion.
• It ended the period with a cash position of $629.16 million as of 31 March 2022, compared to $617.63 million as of 31 December 2021.

Source: Company Reports, Analysis by Kalkine Group

Outlook

The management has opined that it expects Solar Energy Capacity Installed growth to be 25% or more in FY22. It also anticipates total value generated to grow at a faster pace than Solar Energy Capacity Installed for the full-year 2022, with Net Subscriber Values of above $10,000 in Q3FY22. Solar Energy Capacity Installed in Q2 is expected to be in a range between 235 and 245 megawatts.

Key Risks

The company is prone to Government regulations like licensing restrictions, coupled with risks associated with supply chain disruption. The business performance is also linked to the Group’s ability to retain its solar partners.

Valuation Methodology: EV/Sales Based Relative Valuation (Illustrative)

Stock Recommendation

Over the last one month, the stock has given a return of ~31.65%. The stock is trading lower than the average price of 52-week low-high range for the stock at $16.80-$60.60, respectively.

The stock has been valued using EV/Sales multiple based illustrative relative valuation method and the target price so arrived reflects a fall of low double-digit (in percentage terms). A slight premium has been applied to peer average EV/Sales multiple (NTM basis), considering the upgrade in guidance and robust demand outlook.

Considering the current trading levels and risks associated, we are of the view that it is prudent to book profits at the current levels. Hence, we give a “Sell” rating on the stock at the current price of $30.82 per share, as of 06 June 2022 at 9.32 am New York Time, USA (GMT-4).

Technical Overview:

Daily Price Chart

Source: REFINITIV, Note: Purple color line reflects Relative Strength Index (14-Period)

Sunrun Inc. (RUN) is a part of Kalkine’s Global Green Energy Portfolio

Note 1: The reference data in this report has been partly sourced from REFINITIV.

Note 2: Investment decisions should be made depending on the investors’ appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the analysis has been achieved and subject to the factors discussed above alongside support levels provided.