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Valued at $13.8 billion by market cap, Enphase Energy, Inc. (ENPH) is a global leader in the energy technology sector, providing advanced home energy solutions for the solar industry. The California-based company specializes in integrated solar, storage, and energy management systems, featuring its IQ platform and semiconductor-based microinverters for enhanced energy efficiency and reliability.
Shares of this solar technology company have significantly underperformed the broader market over the past 52 weeks. ENPH has declined 23.7% over this time frame, while the broader S&P 500 Index ($SPX) has gained 15.1%. In 2024, ENPH is down 21.7%, compared to SPX's 9% rise on a YTD basis.
However, zooming in further, ENPH’s double-digit dip is less pronounced than the Solar Invesco ETF's (TAN) 36.6% decline over the past 52 weeks and a 26% drop on a YTD basis.
Enphase Energy’s underperformance relative to SPX is due to rising interest rates, which have dampened residential solar demand and increased financing costs. The company has also faced challenges from reduced manufacturing capacity and cost cuts, exacerbated by macroeconomic volatility and weaker demand in key markets.
Nevertheless, despite missing Q2 earnings estimates on Jul. 23, shares of this solar market inverter maker surged a notable 12.8% the following day due to a strong recovery in U.S. demand, which boosted its operating profit beyond expectations. Additionally, the improved gross margin and positive Q3 revenue forecast further bolstered investor confidence in the stock.
However, for the current fiscal year, ending in December, analysts expect ENPH's EPS to decline 62.4% year over year to $1.24. The company's earnings surprise history is mixed. It surpassed the consensus forecast in two of the past four quarters while missing on two other occasions.
Out of the 33 analysts covering the stock, the consensus rating is a “Moderate Buy.” That’s based on 17 "Strong Buy" ratings, two "Moderate Buys," 11 "Holds,” one "Moderate Sell," and two "Strong Sells."
The configuration is slightly less bullish than three months ago, with 18 “Strong Sell” ratings on the stock.
On Jul. 25, Barclays lowered Enphase Energy's price target to $129 while maintaining an “Overweight” rating. The firm highlighted that the company’s de-stocking is completed, Q3 guidance accounts for potential share gains by Tesla (TSLA), and gross margins are continuing to climb.
The mean price target of $125.64 represents a premium of 21.5% to ENPH's current levels. The street-high price target of $170, set by Goldman Sachs (GS) last month, implies a notable potential upside of 64.4% from the current price levels.
On the date of publication, Sohini Mondal did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
