KeyBanc Cuts Sunrun to Sector Weight

Analyst at KeyBanc downgraded Sunrun (NASDAQ:RUN) from Overweight to Sector Weight following a recent rebound in valuation for Sunrun and Sunnova, noting that both stocks were out of favor for most of 2023 due to the impact of interest rates on their valuations.

As businesses driven by discounted cash flow (DCF) valuations, Sunrun and Sunnova are particularly sensitive to interest rate changes, essentially acting as proxies for declining rates. Following a shift in the Federal Reserve's stance, both companies experienced a modest recovery from their lows.

The analysts observe that after this correction, Sunrun now trades closer to its net asset value (NAV), which also aligns with their price target, compared to Sunnova. In light of a generally negative outlook on the sector, KeyBanc prefers to maintain Sunnova as its only Overweight in the space, citing a greater margin of safety. Consequently, Sunrun has been downgraded to Sector Weight at this time.