What happened
Shares of residential solar installer Sunrun (RUN 1.57%) jumped as much as 14.8% in trading on Wednesday after getting a big upgrade from analysts at Morgan Stanley. Shares held their gains for most of the day and are up 11.3% at 3:40 p.m. EDT.
So what
Morgan Stanley kept its overweight rating on shares of Sunrun but increased its price target from $86 to $91 per share. Analyst Stephen Byrd said this is "the most compelling clean energy stock" he covers and Sunrun could be a big player in electric vehicles eventually.
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The bullish thesis is based on big energy trends like higher utility prices, rising demand for renewable energy, and the integration of EVs into home charging. It's this last component that's both compelling and risky for Sunrun. The company can offer energy storage and chargers with their solar systems, but it's not clear how Sunrun would extract significant revenue out of adding a charger to the system.
Now what
There's a big leap from the residential solar installer Sunrun is today and being a full energy management company for homeowners, which would be implied if EVs are somehow adding significant value for the company. A partnership with Ford brings EV charger installation into the mix for Sunrun, which could be part of the company's future. However, I'm skeptical that EVs will be a growth driver for this solar energy stock given that chargers are a commodity for EV buyers. But today investors are jumping in after the analyst price target upgrade and sometimes that's enough to move a stock double digits.
