As President Donald Trump‘s “One Big Beautiful Bill” reshapes the landscape of the renewable energy sector, a KeyBanc Capital Markets analyst is reacting with cautious optimism, noting that the impact on key players may be less severe than initially feared.
The Rating Changes: Analyst Sophie Karp upgraded the ratings for Sunrun Inc (NASDAQ:RUN) and SolarEdge Technologies Inc (NASDAQ:SEDG) from Underweight to Sector Weight.
The Thesis: The “One Big Beautiful Bill” has made changes to several provisions that the energy sector relied on, Karp said in the upgrade note.
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Residential leasing has not been changed in the new bill, owning to which Sunrun "lives to see another day," the analyst stated. While investment tax credits (ITC), which are widely used for renewable energy projects, will be phased out by 2027, this exclusion does not apply to solar, she added.
"Given the dissipation of the immediate regulatory risk and ongoing market consolidation following the bankruptcy of another national competitor, we believe RUN should be able to have a stable tailwind in the near term," Karp wrote.
Residential solar tax credits for individuals are set to be phased out by the end of 2025, the analyst said. While this will change SolarEdge Technologies' business model, the company will be less challenged than rival Enphase Energy Inc (NASDAQ:ENPH), given the latter's "higher priced premium product and lower international sales mix," she further wrote.
RUN, SEDG Price Action: Shares of Sunrun had declined by 11.7% to $9.80 and SolarEdge Technologies by 3.9% to $25.40 at the time of publication on Tuesday.
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