TLDR
- Shares of Sunrun plummeted 28% to $14.74 following the release of conservative 2026 projections
- Fourth-quarter profit of 38 cents per share crushed Wall Street’s 3-cent forecast; sales jumped 124% to $1.16 billion
- Projected 2026 cash flow of $250M–$450M represents potential decline from 2025’s $377M generation
- Jefferies cut its rating to Hold from Buy while maintaining $22 target price
- No dividend or share repurchase program announced, leaving investors disappointed who anticipated capital allocation initiatives
The company delivered fourth-quarter earnings of 38 cents per share, crushing the Street’s 3-cent consensus forecast. Sales reached $1.16 billion, representing a 124% year-over-year jump. Much of this revenue surge stemmed from the company’s decision to monetize newly created leases through a third-party sale — representing a strategic shift in its business model.
However, forward-looking projections sparked the market turmoil.
The solar installer forecasted 2026 cash generation between $250 million and $450 million. The $350 million midpoint falls short of the $377 million achieved in 2025. This represents a backward trajectory that caught Wall Street’s attention.
Shares collapsed 28% to $14.74 during Friday’s session. The decline is particularly painful following a 182% rally over the preceding twelve months and an 11% year-to-date advance before the earnings release.
Jefferies analyst Julien Dumoulin-Smith downgraded shares to Hold from Buy while maintaining a $22 price objective. He characterized the company’s positioning entering fiscal 2026 as adopting a “defensive posture.”
Jefferies Highlights Conservative Positioning
Dumoulin-Smith observed that while competing residential solar firms have expressed growing optimism about industry recovery prospects, Sunrun’s management commentary painted a contrasting picture — one suggesting extended market contraction and heightened focus on balance sheet discipline.
The company also announced plans to reduce its affiliate partner network by approximately 40%. Jefferies interprets this move as an indicator that total installations and new customer acquisitions will decelerate.
Market participants had anticipated either a dividend initiation or stock buyback announcement, particularly given robust 2025 cash generation and advancement toward the firm’s 2x leverage objective. Management declined to commit to either option. Executives indicated that returning capital to shareholders remains under consideration, but current priorities center on safe-harbor investments and reducing outstanding debt.
Jefferies identified constrained tax equity markets and quality control issues within Sunrun’s partner ecosystem as additional challenges facing the business.
The firm maintains a constructive long-term view on Sunrun but sees restricted upside potential throughout 2026 until capital market conditions improve.
One Analyst Maintains Bullish Stance
Not all analysts share the pessimistic outlook. Clear Street’s Tim Moore reaffirmed his Buy recommendation and lifted his price objective to $24 from $23.
Moore expressed confidence despite anticipated volume headwinds, emphasizing Sunrun’s strategic pivot toward higher-margin distribution channels. He views the monetization strategy for newly originated subscriptions as a pathway to enhanced profitability even if installation volumes contract.
Jefferies also acknowledged that third-party originators like Sunrun are well-positioned to capture approximately 25% growth this year following the 25D tax credit expiration — though this potential benefit hasn’t materialized in current guidance.
Sunrun’s conservative messaging contrasts with industry peers such as Enphase Energy, which has embraced prepaid lease and loan products as the sector undergoes transformation.
Shares finished Friday’s trading session at $14.74, marking a 28% single-day decline.
