Sunrun (NASDAQ:RUN), Enphase Energy (ENPH), First Solar (NASDAQ:FSLR) and Sunnova (NOVA) all trade higher Tuesday, +7.2%, +2.1%, +2.6% and +6.5% respectively, after Deutsche Bank initiated coverage of the solar stocks with Buy ratings, citing their strong exposure to the U.S. markets after the passing of the Inflation Reduction Act.
The current "favorable regulatory environment and improving incentive support should help further boost demand for the solar industry," Deutsche Bank's Corinne Blanchard wrote, noting the U.S. solar market has plenty of room for growth, with only 4% of the total addressable market currently using solar panels; ETF: (NYSEARCA:TAN)
On Sunrun (RUN), Blanchard noted its exposure to the U.S. residential solar market, which she believes is poised for strong growth trends, as the Inflation Reduction Act will further boost demand via tax credits to any domestic content; she also cited energy storage pairing, which will become increasingly important and key for new customer acquisitions.
Even with near-term challenges, the analyst likes First Solar's (FSLR) solid booking backlog, with the company fully sold out throughout 2025, and momentum to continue as demand for vertically integrated U.S. manufactured modules is strong.
Blanchard believes ~15% of the market will be penetrated within 10 years, driven by increased costs of utilities, solar costs declining and benefits from the Inflation Reduction Act.
The analyst also launched coverage of SunPower (SPWR) and SolarEdge Technologies (SEDG) with Hold ratings, citing concerns over SunPower's exposure to weakening new home construction, and SolarEdge's supply chain problems and cost pressure on foreign exchange and shipping.
Solar names also may be getting a boost from Shoals Technologies' strong Q3 earnings and guidance.