Shares of Enphase (ENPH) sank in after-hours trading after the solar company reported earnings for its third quarter of Fiscal Year 2024. Earnings per share came in at $0.65, which missed analysts’ consensus estimate of $0.78 per share. In addition, sales decreased by 31% year-over-year, with revenue hitting $380.87 million. This also missed analysts’ expectations of $392.20 million.
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Although sales fell significantly year-over-year, they did increase quarter-over-quarter. Specifically in the U.S., revenue increased by approximately 43% compared to the previous quarter, which was driven by higher shipments to distributors as inventory levels normalized. However, in Europe, revenue declined by around 15% in the third quarter due to a continued drop in demand.
In addition, ENPH repurchased 434,947 shares of common stock at an average price of $114.48 per share during the third quarter for a total of about $49.8 million. Furthermore, management spent around $6.3 million to withhold shares for tax obligations related to employee stock vesting, which reduced the diluted share count by 59,607 shares.
Enphase’s Guidance for Q4 2024
Looking forward, management has provided the following guidance for Q4 2024:
- Revenue of between $360 million and $400 million versus analysts’ estimates of $435.2 million
- Non-GAAP gross margin of 49% to 52%
- Non-GAAP operating expenses ranging from $81 million to $85 million
As we can see, the company’s outlook is worse than expected, which, combined with the earnings and revenue misses, led to the after-hours move in the stock price.
Is Enphase a Buy or Sell?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on ENPH stock based on 12 Buys, 12 Holds, and two Sells assigned in the past three months. After a 6% decline in its share price over the past year, the average ENPH price target of $116.93 per share implies 29% upside potential. However, it’s worth noting that estimates will likely change following today’s earnings report.
