Investing.com -- Citi downgraded residential solar companies Enphase Energy (NASDAQ:ENPH) and Sunrun (NASDAQ:RUN), flagging risks from potential U.S. policy changes, slower utility rate hikes, and tariff headwinds, while upgrading power equipment maker Generac on expectations of stronger performance during the hurricane season.
The bank cut Enphase to “Sell/High Risk” from “Neutral” and lowered its price target to $47, citing limited near-term growth catalysts and long-term risks including tariffs on storage systems, slower electricity price increases, and potential reductions in Inflation Reduction Act incentives.
The company faces near-term challenges from customer losses and policy uncertainty, according to Citi.
Sunrun was downgraded to “Neutral/High Risk,” with Citi warning that a potential elimination of investment tax credit adders could significantly impair the residential solar model, especially as half of U.S. installations rely on third-party ownership financing.
Meanwhile, Citi upgraded Canadian Solar (NASDAQ:CSIQ) to “Neutral” and Generac to “Buy,” saying utility-scale solar players are better positioned despite ongoing policy risks.
Citi noted that much of the tariff and IRA-related headwinds may already be priced into utility-scale names, which could benefit from rising demand tied to data centers and AI-driven infrastructure expansion.
Citi raised its price target on Generac to $138, highlighting the company’s strong domestic exposure, pricing power, and potential upside from an expected above-average hurricane season.
The company successfully navigated past tariff regimes, providing a strategic edge, Citi added.
Ballard Power was downgraded to “Sell,” though Citi said it prefers the stock over peer Plug Power (NASDAQ:PLUG), citing broader challenges facing the hydrogen economy.
First Solar (NASDAQ:FSLR) remained Citi’s top pick in the renewables sector, with Plug Power, SolarEdge (NASDAQ:SEDG), and Enphase listed as its least preferred names.
The note comes amid ongoing budget negotiations in Washington, with the Congressional Budget Office estimating that clean energy tax credits could widen the U.S. deficit by more than $300 billion between 2026 and 2035.
Citi flagged that such fiscal concerns could lead to pressure on IRA-linked incentives.