Sunrun (NASDAQ:RUN) -8.8% and SunPower (NASDAQ:SPWR) -2.6% in Wednesday’s trading as Barclays downgraded the companies with U.S. residential solar demand expected to slow in 2023.

While Barclays analyst Christine Cho cut Sunrun (RUN) to Equal Weight from Overweight with a $35 price target, down from $44, and SunPower (SPWR) to Underweight from Equal Weight with an $18 PT, cut from $26, she sees Overweight-rated Sunnova (NYSE:NOVA) as “best positioned with [its] dealer-only model and lowest exposure” to California, where NEM 3.0 has been approved

Of the three solar installers, Cho sees the most headwinds for SunPower (SPWR) because roughly half the company’s growth is tied to California and a strategy that is more heavily focused on loans.

SunPower (SPWR) is in the midst of a transition which puts it on an improved path from both a liquidity and value proposition standpoint, but its unit economics still trail peers, according to Cho.

Much of Sunrun’s (RUN) growth in recent quarters stemmed from California, so its growth likely will be slowed in the near term from this exposure, Cho wrote.

While strong growth is projected, Sunrun (RUN) also will face significant challenges with increasing competition and high inflation, Daan Rijnberk writes in analysis posted recently on Seeking Alpha.