By Sunrun Inc (NASDAQ: RUN) has been a major disappointment for investors in recent weeks, but a senior analyst at UBS remains convinced that the ongoing sell-off in this solar stock has gone a bit too far.
According to Jon Windham, Sunrun’s stock price crash has created an opportunity to load up on a clean energy name that could weather the risks associated with President Trump’s new budget bill.
Note that Sunrun stock, despite the aforementioned hit, remains up some 30% versus its YTD low.
UBS sees upside in Sunrun stock to $12
Windham reiterated his “buy” rating on Sunrun shares this morning but lowered the price target to $12 to reflect a sector headwind linked to the House passing the “One Big Beautiful Bill Act” last week.
Investors have been bailing on clean energy stocks under the Trump administration this year as its new budget bill proposes removing significant tax credits for solar companies by the end of 2025.
These investment tax credits under the Biden-era Inflation Reduction Act (IRA) incentivized homeowners to install solar panels in pursuit of lower electricity costs.
That’s why the Invesco Solar ETF has lost a little under 15% year-to-date.
However, RUN shares could still navigate this storm and soar up to 75% from here, said the UBS analyst in his latest note to clients.
How may RUN shares navigate the new budget bill?
In his report, Jon Windham confirmed that his downwardly revised price objective on Sunrun stock reflects the potential downfall from the White House potentially removing all tax credits for residential solar.
He remains positive on the solar stock as it could offset these regulatory changes with state-level support and grow its footprint in other end markets like commercial, industrial, and community solar.
Additionally, Sunrun Inc could adjust its Power Purchase Agreements as well to better adapt to the regulatory shift, the UBS analyst argued in his research note.
Note that RUN shares do not pay a dividend at the time of writing.
Sunrun reported strong financials for its Q1
Windham also signalled the possibility of the US Senate reversing its stance on the aforementioned bill in his report as well.
He’s positive on RUN shares on the company’s “underlying $2.6 billion portfolio of contracted net earning assets.”
Moreover, the analyst also sees “potential upside scenarios beyond the US budget bill”.
Sunrun stock may be worth owning for continued strength in its financials.
Earlier in May, the Nasdaq-listed firm reported $504 million in revenue on 20 cents a share of earnings for its fiscal Q1.
In comparison, analysts had called for about $494 million only and 22 cents a share of loss instead for the clean energy firm.
That’s why the consensus rating on RUN remains an “overweight” at writing.
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