UBS says this solar stock can rally 75% even as U.S. budget bill poses risks to clean energy

CNBC

a day ago

Sunrun can surge from here even as a new U.S. budget bill poses a risk to the clean energy sector, according to UBS. Analyst Jon Windham kept his buy rating on the solar company. He did cut his price target to $12 from $17, but that still implies the stock could still gain 75% from Thursday's close. Sunrun shares have plunged nearly 26% this year and more than 52% over the past year, as traders ditch clean energy names under the Trump administration. The Invesco Solar ETF (TAN) has dropped more than 3% in 2025 and 13% in the past six months. The latest headwind for the sector comes after the U.S. House of Representatives on May 22 passed the "One Big Beautiful Bill Act," which proposes to eliminate the 30% Investment Tax Credit by the end of December. The bill has allowed homeowners to reduce their electricity costs by installing solar panels and battery storage systems. "Our lower target multiple reflects the overall intent of the House to seemingly remove all tax credits regarding residential solar and our relatively negative outlook on the Senate's willingness to preserve the credits compared to programs like the 45x manufacturing credit," Windham wrote in a Friday note to clients. RUN 1Y mountain Sunrun stock performance. But according to the analyst, Sunrun could remain resilient in the face of these cuts. If the residential tax credits are fully slashed, he said Sunrun could survive regulatory changes by structuring its Power Purchase Agreement options, getting more state-level policy support and transitioning to end markets such as commercial and industrial and community solar. He also noted that the company has strong assets. "Our estimates are unchanged as there is the potential for revisions in the U.S. Senate and possible that a final bill does not pass," Windham wrote. "We maintain our buy rating ... based on RUN's underlying $2.6bn portfolio of contracted net earning assets. In addition, we see potential upside scenarios beyond the U.S. budget bill." Wall Street remains split on Sunrun. Of the 25 analysts covering the stock, on rates it a strong buy, while 10 rate it a buy and 12 give it a hold, per LSEG.