Enphase Energy, Inc. (NASDAQ: $ENPH) is a major player in the energy technology sector based in Fremont, California. The company develops, manufactures, and sells home energy solutions to manage energy generation, storage, and communication.
The company first came into the limelight in 2006 with its revolutionary micro-inverter technology, widely integrated into modern solar panels. The stock has experienced a positive run in the past two days. It is up around 5.94% as of 09:34 AM EST, trading at $96 per share.
Why is Enphase Energy Stock Rising?
At the close of trading on November 14, 2023, Enphase Energy stock (ENPH) was up nearly 16%. The same was true for other stocks in the solar energy industry, all of which saw double digital growth. ENPH stock’s recent great performance is due to a new US inflation report for October.
According to the BLS Consumer Price Index (CPI) data released on November 14, CPI remained flat sequentially for the month and rose 3.2% year-over-year. That was in line with analysts’ prediction of a 0.1% monthly rise and a 3.3% year-over-year rise.
Soon after the CPI data came out, yields for 10-year Treasury bonds fell to 4.45% from 4.6%. That signals a potential cooling of inflation, which has led to speculation of Fed rate cuts. Cuts by the Fed mean that the cost of borrowing goes down significantly.
Traditionally, most people who install solar systems do so via a financing agreement. When interest rates are high, many people will likely delay installing a solar system until rates come down. Speculation of a Fed rate cut signals good tidings for the solar industry.
Enphase Energy Earnings Report
Enphase Energy released its Q3 earnings report on October 26, 2023. The company reported a revenue of $551.1 million, missing the analysts’ prediction of 566.80 million by 2.77%. It reported earnings per share of $1.02, better than the analysts’ prediction of $1, a surprise of 2.16%.
Revenue in Q3 2023 dropped significantly compared to the previous quarter’s revenue of $711.1 million. The company blamed tough macroeconomic conditions on the drop. It revealed that revenues in the US had dropped 16% in the US and 34% in Europe.
The company attributed the drop in Europe to high inventory at their distribution partners and softening demand in key markets. In Q4, the company said it expected $300-350 million revenue.
ENPH Stock Price Forecast
Analysts have received a moderate buy rating from stock analysts. That means they expect the stock to perform better than the rest of the market in the next 12 months. Analysts predict a high of $300 for Enphase Energy stock and a low of $75 for an average price target of $175.62. Consequently, that would give ENPH stock an upside of over 90% based on the current price of $96 per share.
Should You Buy ENPH Stock?
ENPH stock has had a great run recently; its price has risen 24.89% in the past five days. However, it is still down nearly 61.88% year-to-date. The analysts have revised their stock forecast for the stock up, which is a good sign.
If macroeconomic conditions continue to change in favor of the company, it would be highly beneficial for those currently holding the stock.
Overall, the moderate buy rating that analysts have given the stock is accurate based on current trends as reported in the CPI data.
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