Solar Stock Dimmed on Keybanc Downgrade

A California proposal would diminish benefits for solar customers

Deputy Editor
Dec 20, 2021 at 11:13 AM
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The shares of Sunrun Inc (NASDAQ:RUN) are down 6.6% to trade at $31.97 at last check, after a downgrade from Keybanc to "sector weight" from "overweight." The firm cited last week's solar incentives proposal in California that would diminish the benefits for solar power customers, reducing the rate at which homeowners can sell their excess electricity into the grid. Furthermore, the firm doesn't think that the company could cover much ground before implementation.

Today's drop has RUN trading at annual lows. The security has been steadily declining since being rejected by long-term overhead pressure at the $60 level in November. Now below all short- and long-term moving averages, the equity is down roughly 53% year-to-date. 

The brokerage bunch could decide to follow Keybanc's lead, considering the majority of analysts is currently bullish towards the stock. Of the 16 in coverage, 15 sport a "buy" or better rating. Plus, the 12-month consensus price target of $73.03 is a 127.7% premium to current levels, leaving plenty of room for a sentiment shift. 

Though shorts have been jumping ship of late, with short interest down 13.4% over the last two reporting periods, short interest still makes up 15.8% of the security's available float. It would take nearly six days to buy back these bearish bets, at RUN's average pace of daily trading. 

In the options pits, the stock's 50-day put/call volume ratio of 0.60 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) sits higher than 97% of readings from the last year. This means that though calls are still winning out on an absolute basis, the options pits have been much more bearish than usual. 

Drilling down to today's options activity, 15,000 puts have crossed the tape, which is double what is typically seen at this point, and nearly triple the 6,107 puts exchanged. Most popular is the January 2022 20-strike put, where new positions are being opened.


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