Shares of solar installer Sunrun (RUN -2.14%) jumped 7% in 11 a.m. EST trading Wednesday -- and if you own shares of Sunrun, you can send your thank you notes to Morgan Stanley for that.
Citing a pullback across the solar industry, Morgan Stanley upgraded Sunrun stock to overweight today.
Calling the sell-off in solar stocks "industrywide," Morgan Stanley highlighted Sunrun stock in particular as a "compelling value" at its closing price below $54 a share yesterday -- and predicted the stock will shoot up as high as $86 within a year.
It costs utilities a lot to build power plants to generate electricity, explains Morgan Stanley, but Sunrun's cost structure is falling, creating an "economic wedge" that will favor the solar disruptor going forward. As utilities attempt to pass their high costs on to consumers, the analyst predicts we will see "surging consumer interest" in avoiding those high prices by installing individual solar systems on rooftops, and buying battery systems to store up the solar electricity the systems generate.
This story gets even better for Sunrun. Not only are consumers already economically motivated to switch to rooftop solar, but the analyst believes we will soon see Congress pass laws actually subsidizing the switch -- tax credits for rooftop systems, and even a separate "stand-alone tax credit" for solar storage, reports TheFly.com.
No wonder investors are excited.