According to TheFly, the brokerage also raised the price target for the stock to $11 from $5.

Sunrun (RUN) stock drew retail chatter on Wednesday after Jefferies upgraded the stock to ‘Hold’ from ‘Underperform’ after getting a better look at tax incentives for renewable energy.

According to TheFly, the brokerage also raised the price target for the stock to $11 from $5. The new price target implied an 11.8% upside compared to the stock’s previous close. The stock rose 6.8% on Wednesday.

The brokerage had downgraded the stock last month due to concerns about the incentives under the Inflation Reduction Act. However, Jefferies reportedly changed its view after the One Big Beautiful Bill Act proved favorable to the residential solar energy firm.

The initial drafts of President Donald Trump’s signature tax bill sent shockwaves through the renewable industry, as they proposed a rapid winding down of incentives for renewable projects. While the final version of the bill was still viewed as harsh to solar and wind projects, Congress removed some of the more contentious elements of the bill.

The U.S. government will allow solar and wind project developers to receive tax credits if they begin construction within 12 months of the bill's passage. Renewable developers will also be eligible for the credits even if they miss the deadline if their projects can come online by 2027. Additionally, it will also allow energy storage project developers to receive the full tax credit through 2033, phasing it out entirely by 2036.

Jefferies analysts admitted they “got it wrong” and reportedly stated that the investment tax credit runway through 2027 for solar and beyond 2030 for storage is favorable for the stock. It also said that Trump’s executive orders on ending green energy subsidies were “better than our worst cases feared."

Retail sentiment on Stocktwits about Sunrun was still in the ‘bearish’ (42/100) territory on Wednesday.

“I'm thinking there is some demand that has been sidelined, waiting to see if RUN has more legs here,” one user said.

Sunrun stock has gained nearly 3% this year.

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