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Key Takeaways
- Sunrun shares sank to a more than three-year low before paring back some losses after a downgrade from Truist.
- Truist’s Jordan Levy warned that high interest rates will continue to impact the solar panel installation market.
- Levy said the recent selloff in so-called sustainability equities was related to fears about higher borrowing costs continuing for a longer period of time.
Shares of Sunrun (RUN) fell to their lowest level since April 2020 in intraday trading on Wednesday before paring back some losses after a Truist Securities analyst warned high interest rates will continue to hurt residential solar panel installers.
Truist’s Jordan Levy downgraded Sunrun as well as Sunnova Energy (NOVA) to “Hold” from “Buy,” and cut the price target of each.
Levy noted that so-called sustainability equities experienced a broad-based selloff recently amid investor concerns about borrowing costs staying higher for longer. He said analysts are reevaluating the tradeoff of near-term headwinds versus long-term value creation.
Levy added that investors are paying more attention to steady profitability and margin improvement, which he indicated was difficult in the current economic environment.
He explained that the rising costs associated with high interest rates could not only reduce customer demand for solar panels, but make it harder for the companies to generate cash.
Sunrun shares closed 1% lower on Wednesday, while Sunnova shares posted a 2% gain.
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