Piper Sandler downgrades solar co SunRun on concerns over cash flow generation

Investing.com — Piper Sandler on Friday downgraded the residential solar company Sunrun Inc (NASDAQ:RUN) to “neutral” from “overweight, citing concerns over cash flow generation under a prolonged higher interest rate environment.

The brokerage noted that if IRA amendments reduce homeowner tax credits, residential solar demand could surge in 2025 as consumers rush to capitalize on remaining incentives, but growth could falter significantly in 2026.

Piper Sandler also pointed out that utility-scale solar companies such as NextEra Energy (NYSE:NEE) and First Solar (NASDAQ:FSLR) were better positioned to benefit from potential IRA adjustments, with strong fundamentals and less exposure to consumer tax credit risks.

“Rates remain elevated, Republicans control the Presidency and Congress; as a result, equity performance has been dismal. The silver lining surrounds the likely narrow Congressional margin for error (3-4 House seats) which resides well beneath the number of Republicans that have openly voiced IRA support,” said Piper Sandler analyst Kashy Harrison in the note.

Despite the downgrade, Piper Sandler maintained a positive outlook for companies addressing grid imbalances and base power demand, such as Bloom Energy (NYSE:BE), given their limited exposure to IRA risks and ongoing commercial momentum.

SunRun Inc shares were trading 1.2% up on Friday at $10.35.