By Adam Clark
Enphase Energy stock traded choppily on Wednesday after the supplier of solar and battery systems projected higher revenue than analysts had expected, despite concerns over slowing U.S. demand.
Solar power stocks have been facing increased skepticism from analysts over rich valuations at a time of slowing consumer spending. Enphase (ticker: ENPH), in its fourth-quarter earnings report, said it was facing pressures, but still gave first-quarter revenue guidance that beat expectations.
"We expect our U.S. business to be slightly down in Q1 compared to Q4, primarily driven by seasonality and the macroeconomic environment. We are seeing that our distributor and installer partners are a little more cautious in booking orders," CEO Badri Kothandaraman told analysts on an earnings call.
Enphase said it expects its first-quarter revenue to be within a range of $700 million to $740 million, with a gross margin of 41% to 44%, excluding stock-based compensation expenses and acquisition expenses. Analysts had expected revenue of $685.2 million.
After initially rising as much as 10% in premarket trading, Enphase shares traded down more than 3% early on Wednesday.
Other solar stocks were mixed. First Solar $(FSLR)$ traded up 2% and SunRun $(RUN)$ traded down 0.3%.
President Joe Biden pushed clean-energy incentives in his State of the Union address on Tuesday as he referred to the Inflation Reduction Act (IRA), which gives large tax benefits to solar manufacturers. Enphase said on Tuesday that it would add six manufacturing lines for microinverters -- a key component for solar power systems -- in the U.S. following the passage of the IRA.
"While the company offered a mixed bag commentary on the near-term U.S. market outlook, it is apparent that domestic headwinds are not significant enough to derail ENPH's growth story," analysts at KeyBanc Capital Markets, led by Sophie Karp, wrote.
KeyBanc reiterated an Overweight rating and $363 target price on Enphase stock.
Enphase said its fourth-quarter revenue increased to $724.7 million from $412.7 million the year before. Net income was $1.06 a share, up from 37 cents.
Write to Adam Clark at adam.clark@barrons.com
(END) Dow Jones Newswires
February 08, 2023 10:46 ET (15:46 GMT)
Copyright (c) 2023 Dow Jones & Company, Inc.
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