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Sunrun a 'High Quality Business' - Northland Capital

Stock Markets Sep 28, 2022 12:54PM ET
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© Reuters. Sunrun (RUN) a 'High Quality Business' - Northland Capital
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Northland Capital Markets initiated coverage of Sunrun (NASDAQ:RUN) with an Outperform rating and a $60 price target in a note to clients Wednesday.

The bank told investors that Sunrun is a high-quality business with "very strong and dependable cash flows."

"The company has a flexible multi-channel business model which is ready to burgeon with the growing solar demand well supported by the IRA bill," Northland said. "The recent pull back in the equities market provides a great opportunity for all investors seeking exposure to residential solar market but especially for those who missed the stock run driven by the passage of the IRA bill."

Northland expects the U.S. residential solar market to grow 10% to 15% year-over-year in 2022 and 2023, despite current inflation headwinds.

"We believe, US residential market is extremely underpenetrated with just 3.5% penetration till 2021. We believe this is just the very beginning of a secular bull market thesis as residential solar should become more widely prevalent greatly benefiting companies like RUN," the note said.

Following the Northland note, GLJ Research tweeted disagreement with it.

"Northland Securities' deep dive into cash-incinerating solar sub-prime lending science project $RUN has them w/ a record -$2.6B in free-cash-flow ("FCF") burn in 2022E, surging to a new record FCF burn of -$2.7B in 2023E," the tweet said. "after a cumulative -$12B in FCF burn over the past 10 yrs - i.e., $RUN has burnt MORE money each year in existence, funded, mainly, by US taxpayers. Burning MORE cash each year is FUN! Terminal value doing some heavy lifting here!"

By Sam Boughedda

Sunrun a 'High Quality Business' - Northland Capital

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