NextEra Energy (NEE), First Solar (FSLR), and Enphase Energy (ENPH) are among firms in the clean technology group facing valuation compression in Q3 as elevated interest rates ramp the cost of renewables across the board, Morgan Stanley said in a Wednesday research report.
Higher financing costs likely pose a risk to the residential solar industry's recovery in H2 as demand remains lower than estimated at the start of 2026, despite being higher than H1, analysts wrote.
The upcoming November midterm elections represent a near-term catalyst for powering AI names, potentially allaying the valuation overhang from growing policy uncertainty, according to the note.
Some companies indicated an acceleration in Q3 client demand for power amid concerns around AI security, while a sustained strength in order commentary for the quarter could alleviate worries about near-term data center execution risks, the brokerage stated.
NextEra Energy is due to report Q3 results on Oct. 21, while First Solar and Enphase will report quarterly results on Oct. 29 and Oct. 27, respectively.
The brokerage has an overweight rating on NextEra Energy and adjusted its price target to $110 per share from $111.
For First Solar, Morgan Stanley has an overweight rating on the stock and boosted its price target to $326 per share from $323. It has an underweight rating on the Enphase Energy stock and lowered its price target to $24 per share from $27, citing risks to growth outlook amid near-term residential solar risks.
Price: 77.71, Change: -0.52, Percent Change: -0.66
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