By Angela Palumbo
The worst is finally behind Enphase Energy stock, Barclays said in an upgrade of the shares Friday.
Analyst Christine Cho upgraded her rating on Enphase, which makes microinverter systems for solar panels, to Overweight from Equal Weight. She also increased her price target to $134 from $115, implying a 24% increase from the stock's closing price on Thursday.
Shares of Enphase were rising 3.3% on Friday to $111.35.
Enphase stock has dropped 16% this year and 32% over the last 12 months. Shares declined 5.6% on Wednesday alone after the company reported a drop in revenue for its first quarter, due to seasonal trends and a "further softening in U.S. demand."
Solar companies have taken a hit as interest rates remain elevated. High rates make it more expensive to finance already pricey projects, like installing solar panels.
However, Cho has confidence that Enphase should see a comeback, writing that "demand is set to increase off the recent lows."
Cho also says that now she thinks "current levels provide a reasonable entry point." Along with a drop in the stock price, Enphase currently trades at 29.8 times expected earnings for the coming 12 months. That's below its five-year average of 45.7 times.
Other analysts are also optimistic. Of the 42 analysts surveyed by FactSet, 22 say the stock is a Buy, 16 say it's a Hold, and four say it's a Sell.
Mizuho Securities analyst Maheep Mandloi wrote in a research note Wednesday that he was maintaining his Buy rating on the stock "due to ENPH's position as market leader with strong pricing power, resilient margins, and growth opportunity tied to solar+storage penetration."
Mandloi gives Enphase a $147 price target.
Write to Angela Palumbo at angela.palumbo@dowjones.com
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(END) Dow Jones Newswires
April 26, 2024 12:53 ET (16:53 GMT)
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