Analyst Note| Brett Castelli |
We are lowering our fair value estimates for residential solar companies after incorporating a proposed regulatory ruling in California that could slow rooftop solar growth. We cut our fair value estimates for Sunrun and SunPower by approximately 15% given their relatively large exposure to California. We cut Enphase’s fair value by 5% given its relative concentration within the U.S. residential market. We are reaffirming our fair value estimates for other solar component suppliers such as SolarEdge and Generac given lower revenue exposure.