Shares of Enphase Energy (NASDAQ:ENPH), alongside other solar stocks, plummeted 14% in Friday’s trading after SolarEdge Technologies (NASDAQ:SEDG) warned investors that it will miss its third-quarter guidance for revenue, operating income, and gross margin. While investors already had a lower forecast for solar installation growth in the U.S., a decline in the European market was unexpected. SolarEdge cited “substantial unexpected cancellations and pushouts” from its European distributors due to slowing installation rates and high inventory.
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Weighing in on the conversation, Citi analyst Vikram Bagri said Solar Edge’s Q3 forecast miss will significantly impact the solar panel market, especially for Enphase. He continued by saying, “Europe had been viewed as the main growth driver, but this engine now looks to be faltering.” Bagri also stated that because of the lower demand, the sector’s channel inventory normalization won’t happen until at least the end of Q1 2024.
Furthermore, Bank of America analyst Julien Dumoulin-Smith stated that lowering European sales will impact Enphase’s performance even though the company has lesser exposure compared to SolarEdge. Dumoulin-Smith maintained his Underperform rating on the stock but cut his price target to $84 from $90. He also reduced his European Union sales forecast for Enphase by 40% in Q3 and expects a similar trend to continue into 2024. Additionally, he dropped his full-year revenue expectations by 15% and lowered his earnings estimate for 2024 by 10% to $6.33/share, 30% below the Street’s consensus.
Is ENPH a Good Buy Right Now?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on ENPH stock based on eight Buy, three Holds, and one Sell assigned in the past three months, as indicated by the graphic above. Furthermore, the average ENPH price target of $167.60 per share implies 68.53% upside potential.
