Enphase Energy, the IBD Stock Of The Day, reported strong third-quarter results on Tuesday. ENPH stock is near a buy range.
The company is a leading provider of solar microinverters and battery systems. Microinverters boost solar energy production, improve reliability in solar energy systems and support intelligent energy management.
The company focuses primarily on residential markets.
Enphase beat estimates for its third quarter. It reported adjusted earnings of $1.25 a share on revenue of $634.7 million. Wall Street expected Enphase to report earnings of $1.09 a share on revenue of $530.2 million.
In reaction to its earnings report Tuesday, ENPH stock jumped 9.9% to close at 291.87. The buy point is 324.94 out of a consolidation, but shares are actionable from its gap above the 50-day moving average. A sell signal would be any close below Wednesday's low, which is right around the 50-day line.
ENPH: Solid Top And Bottom Beat
"ENPH delivered a solid top and bottom-line beat," Needham analyst Vikram Bagri said in a note to clients. Bagri raised his price target on Enphase stock to 335, from 275, with a rating of buy.
The news seemed to boost the stocks of other solar companies. First Solar, which reports earnings Thursday, jumped more than 3%. Meanwhile, Daqo New Energy surged more than 7%. And Canadian Solar climbed more than 4%.
For its fourth quarter, Enphase expects revenue in the range of $680 million to $720 million. The midpoint of $700 million is above Wall Street estimates of $655 million.
"Demand was strong in our markets worldwide, particularly in North America and Europe," the company said in its news release.
"Our revenue in Europe for the third quarter of 2022 increased approximately 70%, compared to the second quarter of 2022, as countries in the region are accelerating their efforts to address rising energy prices and reliance on fossil fuel," Enphase went on to say.
ENPH Stock Performance
Enphase stock is up 64% for 2022, including Wednesday's gain.
"As ENPH continues to grow ahead of expectations while driving costs lower, we believe the company has several areas of opportunity," Oppenheimer analyst Colin Rusch said in a note. This includes battery systems and a redesign of its microinverters.
Rusch went on to say: "We believe ENPH is augmenting its offerings with enhanced software and charging capabilities and can continue to grow revenue per home, suggesting incremental operating leverage."
The IBD Stock Checkup tool shows that ENPH stock has a perfect IBD Composite Rating of 99 out of 99. When choosing growth stocks for the biggest potential gains based on the CAN SLIM investment paradigm, try to focus on those with a Composite Rating of 90 or higher.
ENPH stock has a Relative Strength Rating of 98 out of 99. Ideally, look for stocks with an RS rating of 80 or higher.
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