Shares of Enphase Energy (ENPH) are trading closer to their 52-week low of $73.49 after the manufacturer of solar micro-inverters’ third-quarter results fell short of Wall Street estimates, leaving investors disappointed. Following the Q3 results, several Wall Street analysts have downgraded ENPH stock.
Let us look at what Wall Street analysts are saying about ENPH stock.
Guggenheim Analyst Downgrades ENPH
Following the earnings report, five-star rated Guggenheim analyst Joseph Osha downgraded the stock to a Sell from a Hold. The analyst pointed to substantial challenges in the European market as the key reason behind the downgrade. In fact, the company’s revenues in Europe declined by 15% year-over-year in the third quarter.
Furthermore, Osha remained unconvinced by the company management’s explanations for the weaker-than-expected results and outlook, which cited poor economic conditions and lower power prices. On the contrary, Osha argued that the real reason behind ENPH’s weaker-than-expected results could be that the company is losing market share to Chinese competitors who are offering similar products at significantly lower prices than Enphase.
Explaining further, the analyst pointed out that Enphase’s struggles in Europe are similar to those of many growth-oriented tech firms that push beyond what customers need, only to be undercut by improving yet cheaper alternatives. This factor has led to the company’s guidance pointing toward a sharp decline in revenue and volume projections in Europe next year.
As a result, Osha lowered the ENPH price target to $73 from $90, implying a downside potential of 12.6% from current levels.
Other Analysts Reiterate ENPH Rating But Lower Price Targets
Meanwhile, Piper Sandler analyst Kashy Harrison maintained a Hold rating on the stock but lowered their price target to $85 from $105, implying an upside potential of 1.8% from current levels. The analyst pointed to the disappointing Q3 results for the downgrade and predicted weak demand in Europe as the adoption of solar energy in France is cooling due to anticipated cuts in utility rates.
Additionally, Seaport analyst Tom Curran lowered his price target to $129 from $144 but maintained a Buy rating on the stock. The analyst’s new price target implies an upside potential of 54.4% from current levels. Curran noted the surprising negative update on Europe but remained optimistic about the company’s prospects due to a recovering U.S. residential market, confidence in Enphase’s battery strategy and technology, and strong free cash flow generation.
Is ENPH a Good Buy Right Now?
Analysts remain cautiously optimistic about ENPH stock, with a Moderate Buy consensus rating based on 15 Buys, 11 Holds, and three Sells. Year-to-date, ENPH has declined by more than 30%, and the average ENPH price target of $102.06 implies an upside potential of 22.2% from current levels.
