Enphase Energy Valuation To Remain Pressured In Near Term, Analyst Says

Several analysts downgraded Enphase Energy Inc ENPH following its weak Q3 FY23 earnings.

Yesterday, Enphase reported EPS of $1.02, missing the $1.03 estimate. The company's revenue of $551.1 million fell short of consensus.

The company anticipates Q4 revenue of $300 million-$350 million, far short of the $601.24 million estimate.

Oppenheimer analysts downgraded the stock to Perform from Outperform and removed the $191 price target.

The analysts say broader market dynamics remain mixed, and consumer concerns and probable elevated interest rates suggest an uncertain spring demand recovery.

The analysts lowered estimates for revenue and adjusted EPS to $2.305 billion (from $2.553 billion) and $4.38 (from $4.52) for FY23; $1.800 billion (from $2.910 billion) and $2.79 (from $5.20) for FY24; and $2.333 billion (from $3.699 billion) and $4.18 (from $7.06) for FY25.

Raymond James analyst Pavel Molchanov cut the price target to $175 from $125 while maintaining an Outperform rating.

The analyst estimates an FCF of $576 million for FY23 and raised it slightly for 2024 despite the lower EPS. Also, given a cash balance of $1.78 billion ($490 million on a net basis), the analyst sees ample room to accelerate share buyback opportunistically. 

The analyst decreased estimates for revenue and adjusted EPS to $2.327 billion (from $2.727 billion) and $4.47 (from $5.38) for FY23, and $1.989 billion (from $3.108 billion) and $4.16 (from $6.98) for FY24.

Also, Piper Sandler lowered the rating to Neutral from Overweight and cut the price target to $75 from $150. HSBC reduced the rating to Hold from Buy with a price target of $86.

On the other hand, KeyBanc Capital Markets analyst Sophie Karp maintained an Overweight rating with a price target of $148. 

The analyst expects the company's shares to react negatively to the Q4 guidance, notwithstanding the poor revenue outlook and Q3 results.

The analyst anticipates the valuation to remain pressured in the near term and notes that while ENPH has taken a very conservative approach to Q4 shipments, the clarity on the trajectory will not emerge until later in the fall when more data points on demand and inventory levels are available.

Price Action: ENPH shares are down 14.42% at $82.32 on the last check Friday.