Key Takeaways
- Shares of Sunrun plummeted 28% to $14.74 following disappointing forward-looking projections for 2026
- Fourth-quarter earnings delivered 38 cents per share, crushing analyst expectations of just 3 cents; revenues surged 124% to $1.16 billion
- Company’s 2026 cash generation forecast of $250M–$450M represents a potential decrease from 2025’s $377M
- Investment firm Jefferies cut its rating on RUN to Hold from Buy while maintaining a $22 target price
- The company failed to announce share buybacks or dividends, leaving investors disappointed about potential shareholder returns
The company’s fourth-quarter results showed earnings of 38 cents per share, significantly exceeding Wall Street’s consensus estimate of 3 cents. Revenue reached $1.16 billion, representing a year-over-year increase of 124%. A substantial portion of this revenue growth stemmed from the company’s decision to monetize newly originated lease agreements through third-party sales — representing a strategic shift for Sunrun.
However, forward guidance spooked investors and triggered the selloff.
The solar company forecasted cash generation for 2026 in a range of $250 million to $450 million. The midpoint of this guidance — $350 million — falls short of the $377 million achieved in 2025. This year-over-year decline signaled trouble to market participants.
Shares collapsed 28% to $14.74 during Friday’s trading session. The decline is particularly painful considering the stock had rallied 182% over the preceding twelve months and gained 11% year-to-date before earnings were released.
Jefferies downgraded Sunrun’s stock from Buy to Hold while keeping its price target at $22. Analyst Julien Dumoulin-Smith characterized the company’s approach as taking a “defensive posture” as it enters fiscal year 2026.
Analysts Highlight Conservative Strategy
Dumoulin-Smith observed that while competing residential solar providers have expressed optimism about an industry rebound, Sunrun’s quarterly conference call painted a contrasting picture — one focused on managing through extended market weakness and implementing stricter financial controls.
The company announced plans to reduce its affiliate partner network by approximately 40%. According to Jefferies, this move signals that installation volumes and new customer acquisitions are likely to decelerate.
Market participants had anticipated announcements regarding dividends or share repurchase programs, particularly given the company’s solid 2025 cash generation and movement toward its 2x leverage objective. However, Sunrun offered no such commitments. Company executives indicated that returning capital to shareholders remains under consideration, but current priorities center on safe-harbor investments and reducing outstanding debt.
Jefferies identified constrained tax equity markets and quality control issues among Sunrun’s partner network as additional challenges facing the business.
The firm stated it maintains a constructive long-term view on Sunrun but anticipates limited stock appreciation through 2026 until capital market conditions improve.
Contrarian Voice Emerges
Not all analysts share the pessimistic outlook. Clear Street analyst Tim Moore maintained a Buy rating and increased his price target to $24 from $23.
Moore expressed confidence despite volume concerns, highlighting Sunrun’s strategic emphasis on higher-margin distribution channels. He believes the monetization of newly originated subscription contracts can drive improved profitability even if total installation volumes decline.
Jefferies acknowledged that third-party originators including Sunrun stand to benefit from approximately 25% growth potential this year following the 25D tax credit expiration — although this potential upside hasn’t yet materialized in management’s guidance.
Sunrun’s conservative messaging contrasts sharply with competitors like Enphase Energy, which has pivoted toward prepaid lease and loan products as the sector undergoes transformation.
The stock finished Friday’s session at $14.74, down 28% for the day.
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