Enphase Energy Facing Soft US Demand, Challenges in Other Markets, Morgan Stanley Says

MT Newswires Live10-28 23:38

Enphase Energy (ENPH) is facing soft US demand and challenges in global markets as interest rates weigh on residential solar demand, Morgan Stanley said in a note Wednesday.

The investment firm said the company's shares will likely "remain under pressure until there is further evidence of success in new growth initiatives in 2027."

The company reported Q3 adjusted EPS of $0.41, below the FactSet estimate of $0.51, while revenue was $293.3 million, missing the consensus estimate of $304.6 million.

As the residential solar market has remained weak into H2, the company's Q3 results missed both Morgan Stanley and consensus' expectations for most metrics, the note said, adding the company's Q4 outlook was also "well below expectations as [Q3] headwinds extend through the end of the year."

The company's global sell through rose just 1% compared with the Enphase's expectations of 10% sequential growth, and compared with 2% growth in Q2, Morgan Stanley said. Meanwhile, US sell-through rose 5% sequentially, and sell-through in Europe fell 12% in Q3, the note said.

Morgan Stanley highlighted that Enphase is "not seeing a meaningful recovery in US demand and [Q4] sell through is now expected to decline 10%." Additionally, the company expects to undership by $20 million in Q4 as distributors hold less inventory ahead of a seasonally slow Q1, the note said.

Morgan Stanley kept the company's underweight rating and lowered its price target to $16 from $24.

Price: 24.88, Change: -4.88, Percent Change: -16.40

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Comments

  • Shivaya
    10-29 01:14
    Shivaya
    Whether Enphase Energy (ENPH) will actually drop to $16 depends entirely on whether the severe headwinds highlighted by Morgan Stanley and other major financial institutions materialize further, or if the broader residential solar market finds a floor. Here is a breakdown of what that $16 price target means and what factors are driving the bearish sentiment: 1. Where does the $16 target come from?  * Morgan Stanley’s Stance: Morgan Stanley maintained an Underweight rating on ENPH and aggressively slashed its price target from $24 to $16.  * The Rationale: The downgrade follows a weak Q3 earnings report and a disappointing Q4 outlook. Morgan Stanley points to persistently soft US demand, declining European sell-through (down 12% in Q3), distributor destocking, and lower anticipate
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