Sunrun Inc. 3Q Preview: Financing, volumes, and safe harbor

Barclays' 3Q preview on Sunrun (RUN.US) argues the outlook remains tied to financing costs, direct-channel trends, and safe harbor execution. While higher interest rates pressure customer economics and cash generation, RUN has some protections: rising utility rates, tax equity pricing holding in the high-$0.80s to low-$0.90s, ABS spreads near recent lows, and limited exposure to markets near break-even. On volumes, affiliate volumes have fallen ~60% after channel cuts, leaving the direct business to comprise more than 85% of originations this year; direct sales have returned to 10%+ y/y growth, and easier comps from 1Q27 should allow a return to overall y/y volume growth by end-2026. FY26 safe harbor net investment is guided at $50-100mm, largely finalized by 4Q with possible quarterly volatility. Cash generation for 3Q is modeled at $54mm and aggregate subscriber value at $1.31bn. The price target is lowered to $12 (from $14), maintaining an Equal Weight rating.