What’s Next for Enphase Energy (NASDAQ:ENPH) after a Difficult 2023?
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What’s Next for Enphase Energy (NASDAQ:ENPH) after a Difficult 2023?

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Analysts remain cautiously optimistic about Enphase Energy amid weak consumer demand in its major markets.

Amid higher interest rates and tepid consumer demand, solar energy stocks have largely struggled so far this year. Shares of microinverter-based solar and battery systems provider Enphase Energy (NASDAQ:ENPH) have tanked nearly 69% over the past year.

The company’s recent third-quarter performance was marked by a sequential drop in revenue to $551.1 million from $711.1 million. Additionally, its EPS fell to $0.80 from $1.09 despite an improvement in gross margin. Amid a challenging business environment, its U.S. revenue plummeted by 16%, and revenue in Europe decreased by 34% owing to high inventory levels at its distribution partners.

While the company is introducing new products and expanding product shipments to multiple markets, Bank of America’s Julien Smith has maintained a Sell rating on the stock and lowered the price target to $65 from $76. Smith expects volumes for the company to recover only in the second half of 2024 after a softer first half.

In contrast, Mizuho’s Maheep Mandloi recently initiated coverage on Enphase with a Buy rating and a more optimistic $131 price target. Furthermore, Enphase Energy has rallied nearly 33% over the past few sessions on optimism from the recent U.S. inflation report. The soft inflation print could potentially lead to a pause in rate hikes from the U.S. Fed.

Is ENPH a Buy, Sell, or a Hold?

Overall, the Street has a Moderate Buy consensus rating on Enphase, and the average ENPH price target of $114.08 implies a modest 13.8% potential upside. In addition, despite challenging conditions, Wall Street is maintaining faith in major solar stocks, as long-term growth prospects for these names still remain bright.

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