On Wednesday, Citi analysts, led by Vikram Bagri, adjusted the price target for Enphase Energy (NASDAQ:ENPH) shares to $70.00, a slight decrease from the previous $72.00, while maintaining a Neutral stock rating. The revision follows Enphase Energy's first revenue guidance beat in nearly two years, with gross margins exceeding expectations due to Investment Tax Credits ( ITC (NSE:ITC)) from the Inflation Reduction Act. This development comes as the solar sector faces significant challenges, with key players like SolarEdge Technologies (NASDAQ:SEDG) showing concerning trends according to InvestingPro data.
For the first quarter of 2025, Enphase Energy reported core revenues of $322 million, which aligned with Citi's estimates but fell short of the broader market consensus by 5%. The company's outlook for the first quarter suggests that full-year 2025 core revenues could underperform market expectations by more than 10% unless there is an increase in safe harbor sales or a recovery in key markets. This sector-wide challenge is reflected in SolarEdge's performance, with InvestingPro data showing a dramatic 70.5% revenue decline in the last twelve months.
The California market has shown signs of stabilization, but the company is still working through a backlog from the Net Energy Metering (NEM) 2.0 policy. European revenues saw a quarter-over-quarter decrease of 25%, closely matching Citi's application data, which indicated a 26% decline. Notably, France, Enphase's largest European market, experienced significant rate reductions, casting uncertainty on future performance.
Enphase Energy faces additional headwinds, including anti-dumping/countervailing duties (AD/CVD) on anode materials and ongoing tariffs on Chinese imports. However, the company's research and development efforts are leading to new product launches, which are expected to bolster revenues and gross margins in the second half of 2025.
The company's fourth-quarter 2024 buyback of approximately $200 million came as a surprise to analysts and is anticipated to continue. Despite these developments, Citi expects that the stock's after-market outperformance may wane, potentially indicating negative implications for SolarEdge Technologies (SEDG), a company operating in the same sector. According to InvestingPro analysis, SolarEdge currently shows weak financial health metrics and is scheduled to report earnings on February 19, 2025. With a market cap of approximately $805 million and analyst consensus showing limited upside potential, investors seeking deeper insights can access comprehensive Pro Research Reports covering over 1,400 US stocks, including detailed analysis of the solar energy sector.
In other recent news, SolarEdge Technologies and Summit Ridge Energy have teamed up on a 100MW solar project, aiming to bolster domestic manufacturing and American energy independence. SolarEdge's inverter solutions will standardize SRE's solar installations across the U.S., with shipments starting in April 2025. Analysts from Citi, Goldman Sachs, and Canaccord Genuity have weighed in on SolarEdge's prospects. Citi's Vikram Bagri downgraded SolarEdge stock from Neutral to Sell, citing industry-wide challenges and competition. Conversely, Goldman Sachs' Brian Lee reaffirmed a Buy rating, citing new agreements and tax credit sales as positive developments. Canaccord Genuity's Austin Moeller maintained a Hold rating but raised the price target to $18, anticipating operational expenditure savings to positively impact earnings in 2025-2026. These are among the recent developments for SolarEdge.
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