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As Sunrun hits rooftop solar record, shares dive on earnings woes

Shares in Sunrun Inc. dove roughly 17% in early trading Aug. 10 after the U.S. home solar specialist's weak second-quarter profits marred its record installations.

The company posted adjusted earnings of 6 cents per share after markets closed Aug. 9, missing S&P Global Market Intelligence's consensus estimate of 24 cents per share by 75% and triggering a selloff that reversed a recent run on Sunrun's stock after California regulators created a new requirement for solar on all new homes. Sunrun's stock was up 142% year to date at $14.34 per share as markets closed Aug. 9 before dipping under $12 per share Aug. 10. The share rebounded back to over $13 in afternoon trading.

Noting the earnings disappointment, analysts at Oppenheimer & Co. Inc. nevertheless raised their price target to $17 per share on Sunrun's "increasing leadership position in the market and its ability to refinance its growing portfolio," the firm said in a note to clients.

Sunrun delivered its highest-ever volume of rooftop solar in one quarter, installing 91 MW in the second quarter. The company expects to deploy 100 MW in the third quarter. Despite President Donald Trump's introduction of 30% import tariffs in January, the San Francisco-based company is targeting installation of at least 15% more capacity in 2018 than the 289 MW it added in 2017.

A global solar panel oversupply is driving prices lower, offsetting the impact of import tariffs, Sunrun Chairman and co-founder Edward Fenster told investment analysts on an Aug. 9 earnings call. "We definitely are seeing spot prices sort of across the board declining," he said. "Panel prices on a spot basis are probably approximately back where they were a year ago prior to the run-up in price ahead of the Section 201 tariffs."

As solar panel prices drop, Sunrun continues to expand its energy storage business, which includes adding batteries at customer sites that it plans to use to offer grid services in a partnership with National Grid PLC.

"We have installed thousands of [storage] systems thus far and we will more than double [battery] installations in the second half of 2018 as compared to the first half," CEO Lynn Jurich said on the call. About 10% of Sunrun's customers that purchase systems directly are adding batteries. That rate is "well above 20%" in California, and has hit nearly 60% in some parts of Southern California, she added.