Sunrun Soars on Beating Rooftop Solar-Installation ForecastBy
Sunrun added 65 megawatts of rooftop systems in second quarter
‘One of the most undervalued names in the sector,’ Jobin says
Sunrun Inc. climbed the most in more than six months after sales increased 69 percent in the second quarter, beating expectations, and the second-biggest U.S. rooftop solar company exceeded its installation forecast.
The company gained 15 percent to $6.23 at the close in New York, the most since Jan. 28.
Sunrun installed 65 megawatts of panels in the second quarter, exceeding its target of 60 megawatts, according to a statement Thursday. Revenue swelled to $122.5 million from $72.7 million a year earlier, exceeding the $111.3 million average of seven estimates compiled Bloomberg.
The company said it expects to add 270 megawatts to 280 megawatts of panels this year. That’s as much as 38 percent more than 2015, even after it trimmed its May forecast of 285 megawatts, and is a higher growth rate than its two larger rivals, SolarCity Corp. and Vivint Solar Inc., which have both had challenging years.
“We believe Sunrun remains one of the most undervalued names in the sector,” Patrick Jobin, an analyst at Credit Suisse Group AG, said in a research note Friday. He affirmed his $18 price target for the shares and rates the company the equivalent of buy.
Sunrun reported net present value, or NPV, of 94 cents a watt in the second quarter, more than doubling the 40 cents in the first quarter. In May, Sunrun said it’s focused this year on boosting NPV, a measure of the profitability of its systems, to more than $1 a watt in the second half.
“Management has executed well, in our view -- achieving volume targets, reducing costs, increasing the NPV of new customers, and maintaining a consistent strategy all the while employing a deliberately low-risk capital structure with leading visibility,” Jobin said.
SolarCity, the top installer, has focused on growth at the expense of income, and has lost money in all but three quarters since its initial public offering in December 2012. It agreed this month to be acquired by Tesla Motors Inc. Vivint, the No. 3 installer, was the target of a failed acquisition bid by SunEdison Inc. that dragged down installations.
Sunrun’s net income rose more than fourfold in the second quarter to $32.6 million, or 31 cents a share, from $7.5 million a year earlier. Analysts had expected a 51-cent loss, the average of two estimates compiled by Bloomberg.
Sunrun’s performance makes it stand out in the field, said Matt Tucker, an analyst at KeyCorp.
“In light of its peers’ results and the negative news flow around residential solar that has been pretty consistent, the fact that they beat our estimates and their own guidance on basically every meaningful operating metric surprised me,” Tucker said in an interview Thursday. “They’ve been the most consistent in terms of delivering what they say they’re going to.”