Citi analyst Vikram Bagri lowered the price target on Sunrun (NASDAQ: RUN) to $16 from $20 while maintaining a Buy rating, according to a research note.

Bagri cited Sunrun's second-quarter contracted net value creation coming in at the low end of its guidance, along with a miss on free cash flow estimates. The analyst attributed the shortfall to higher costs tied to a slow ramp in direct sales volumes following the hiring of 1,500 people year-to-date.

Sunrun also reduced its full-year cash guidance by $62.5 million, as its volume growth outlook worsened from an approximately 11% decline year-over-year to approximately 20%, driven by falling affiliate volumes and a slow ramp in its direct business.

Bagri noted that direct business growth is guided to reach approximately 10% by year-end 2026. The analyst added that "there is a clear path to buybacks and management sees value in it," and that at current prices the stock reflects a free cash flow yield above 10%.