Enphase Energy (NASDAQ:ENPH) stock is getting hammered, but the company is still a solar industry standout with international operations. I think the market is wrong about ENPH stock, and I’m feeling bullish about it for the remainder of the year.
Don't Miss our Black Friday Offers:
- Discover the latest stocks recommended by top Wall Street analysts, all in one place with Analyst Top Stocks
- Make smarter investments with weekly expert stock picks from the Smart Investor Newsletter
Enphase Energy is based in California, and the company sells inverter systems for solar photovoltaic (PV) installations. Another company that’s headquartered in Israel operates in the same industry as Enphase — but more about that in a moment.
I believe that investors should focus on Enphase Energy’s strong points instead of obsessing over its competitors’ problems. On the other hand, if a rival’s issues are causing people to sell Enphase Energy stock, then this is a signal for contrarian traders to consider scooping up some ENPH shares at a nice discount.
“Sympathy Effect” Wreaks Havoc on Enphase Energy Stock
What caused ENPH stock to drop by around 15% today? It wasn’t an earnings report, as Enphase Energy isn’t scheduled to report its third-quarter 2023 financial results until October 26.
I should mention, by the way, that Enphase Energy has a stellar track record of beating Wall Street’s quarterly EPS forecasts. For Q3 of 2023, analysts have already priced in a quarter-over-quarter and year-over-year EPS decline. Hence, there may be a nice surprise in store when Enphase releases its third-quarter results in a few days.
In any case, the sudden decline in ENPH stock really wasn’t due to anything that Enphase Energy did. Rather, it was based on what I call the “sympathy effect.” Sometimes, nervous investors will sell a stock that happens to be in the same category as a different stock that fell sharply.
As you may be aware, SolarEdge Technologies (NASDAQ:SEDG) operates a similar business to Enphase Energy. While SolarEdge isn’t expected to release its full Q3-2023 earnings results until November 6, the company recently published its preliminary quarterly financial numbers.
Just to sum it up, SolarEdge Technologies acknowledged distributor-related issues in Europe, and the company lowered its third-quarter revenue guidance range. As you might assume, the market wasn’t very pleased about this.
Consequently, SolarEdge stock is currently down by around 28% today. I would contend that the “sympathy effect” caused Enphase Energy large drop today as well. Plus, I feel that there’s a great opportunity here. Again, I encourage you to take a look at Enphase Energy’s earnings track record as well as the company’s financials. The company has more cash and equivalents than debt and is generally in a healthy financial position.
Enphase Energy’s Global Takeover
Okay, so Enphase Energy might not exactly be taking over the planet. The company has to deal with fierce competition from SolarEdge and other rivals. Still, Enphase is ambitiously establishing its footprint in multiple regions of the world, and it’s unclear whether the market really appreciates this.
Starting in North America, Enphase Energy recently launched its IQ EV Charger product line in the United States and Canada. The IQ EV Charger has too many features to list here, but essentially, Enphase Energy’s product is “Wi-Fi-enabled and includes smart control and monitoring capabilities.”
Next, we’ll take a quick trip to Europe, where Enphase Energy is teaming up with Germany-based climate-technology start-up 1KOMMA5° to commercialize Enphase Energy Systems. These systems will be powered by Enphase’s IQ8 Microinverters and IQ Batteries and will be available in select European countries, including Sweden and Denmark.
Furthermore, Enphase Energy has started shipping its IQ8 Microinverters to India as well as to South Africa. If the solar energy revolution is truly global in scope, then Enphase Energy is positioning itself as a worldwide provider of the necessary equipment for this emerging movement.
Is ENPH Stock a Buy, According to Analysts?
On TipRanks, ENPH comes in as a Moderate Buy based on 14 Buys, eight Holds, and one Sell rating assigned by analysts in the past three months. The average Enphase Energy price target is $167.52, implying 70.9% upside potential.
If you’re wondering which analyst you should follow if you want to buy and sell ENPH stock, the most accurate analyst covering the stock (on a one-year timeframe) is Colin Rusch of Oppenheimer, with an average return of 200.59% per rating and an 82% success rate. Click on the image below to learn more.
Conclusion: Should You Consider ENPH Stock?
Enphase Energy is establishing its market footprint on more than one continent, and the company could have revenue streams coming from all over the world in the coming years. However, the market doesn’t seem to be aware of Enphase Energy’s growth potential.
Instead, investors are in panic-selling mode because of SolarEdge Technologies’ issues. That’s actually great news for stock traders today, and I encourage contrarians to strongly consider ENPH stock while it’s trading in the red.
