The higher interest rate environment and lower utility rates have sapped demand for home solar companies, including Enphase Energy (NASDAQ:ENPH). The company is targeting operational efficiencies to deliver profitable growth as demand wanes. Enphase is a provider of microinverter-based solar and battery systems.
In a recent filing with the SEC (Securities and Exchange Commission), the company announced the initiation of a restructuring plan. The initiative aims to reduce operating costs and realign its workforce and cost structure with current market conditions.
With this backdrop, let’s delve into ENPH’s restructuring plan.
Enphase Plans to Cut Operating Costs
As part of this plan, Enphase will trim its global workforce by approximately 10%, encompassing both contractors and employees. Furthermore, the company will optimize its operations by discontinuing activities at its contract manufacturing facilities in Timisoara, Romania, and Wisconsin, United States, while resizing its other contract manufacturing sites.
Also, Enphase’s strategic focus will shift towards the United States, where it will concentrate on manufacturing microinverters through its existing partnerships with two contract manufacturing entities in South Carolina and Texas.
With these measures, ENPH expects to achieve a global capacity of approximately 7.25 million microinverter units per quarter.
Is Enphase a Buy, Hold, or Sell?
Enphase stock has shown recovery and gained nearly 26% in one month on the expectation of rate cuts in 2024. Further, amid the slowdown in overall demand, Enphase is focusing on strengthening its relationship with customers and reducing operating costs. Moreover, the company is working on its next two generations of microinverters and batteries, introducing products for small commercial and emerging residential solar markets, and expanding worldwide.
While all these measures are expected to support long-term growth, the near-term weakness in demand keeps analysts cautiously optimistic about its prospects. With 15 Buy, 12 Hold, and one Sell recommendations, ENPH stock has a Moderate Buy consensus rating. Further, the analysts’ average price target of $116.38 implies 6.17% downside potential from current levels.
