Solar stocks like Enphase Energy (NASDAQ:ENPH), Sunrun (NASDAQ:RUN), and SolarEdge Technologies (NASDAQ:SEDG) have underperformed so far this year. The higher interest environment and lower utility rates in several states are taking a toll on residential demand in the U.S. As a result of this weakened demand, Susquehanna analyst Biju Perincheril lowered the price target on these solar stocks on July 6.
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The analyst said that his latest industry checks revealed softening demand across the U.S. residential market. Despite this, Perincheril remains upbeat about the long-term prospects of these solar companies. However, near-term growth concerns led the analyst to reduce the price targets.
What is the Future of ENPH Stock?
Perincheril lowered ENPH’s price target to $225 from $275. Besides for lower residential demand, growing competition in the battery business could further pose challenges for the company. However, the analyst maintained his bullish outlook on the stock.
ENPH will likely benefit from secular sector tailwinds in the long term. Meanwhile, the momentum in its European business is positive. Further, ENPH stock has lost substantial value (down 39% year-to-date), which has lowered its valuation, leading B. Riley analyst Christopher Souther to upgrade the stock on June 30.
Overall, ENPH stock has received 19 Buy, two Hold, and two Sell recommendations for a Moderate Buy consensus rating. Analysts’ average price target of $254.76 implies a potential upside of 57.86% from current price levels.
Is Sunrun a Good Stock to Buy Now?
Perincheril lowered the price target on Sunrun stock to $33 from $40. Like ENPH, analysts maintain a cautious outlook on RUN stock due to higher interest rates and increased expenses that are taking a toll on its bottom line.
The stock has 11 Buy and four Hold recommendations for a moderate Buy consensus rating. Analysts’ average price target of $32.80 is 98.67% higher than its current price levels.
Will SolarEdge Stock Go Up?
The uncertainties in the U.S. residential market prompted Perincheril to reduce his price target on SEDG stock to $365 from $400. However, the analyst has a bullish outlook for the stock.
Including Perincheril, SEDG stock has received 12 unanimous Buy recommendations for a Strong Buy consensus rating. Wall Street analysts’ average price target of $392.33 implies 53.81% upside potential.
Bottom Line
While uncertainties in the U.S. residential market amid higher interest rates pose short-term challenges for these solar companies, a focus on decarbonization, government incentives, and substantial investments in the sector provide a solid platform for long-term growth.
Meanwhile, among ENPH, RUN, and SEDG, analysts firmly back SEDG stock. Meanwhile, SEDG also carries an Outperform Smart Score of nine on TipRanks. In comparison, ENPH and RUN have a Neutral Smart Score.
