Enphase Energy (NASDAQ:ENPH) shares dropped more than 20% in pre-open Friday following the Q3 results.
EPS of $1.02 came in a tad worse than the consensus estimate of $1.03. However, revenue of $551.1 million widely missed the consensus estimate of $574.86M.
The company attributes a 16% quarter-over-quarter Q3 revenue drop in the U.S. to prevailing macroeconomic conditions. Meanwhile, revenue in Europe saw a sharper decline of 34% quarter-over-quarter, due to high inventory at the company's distribution partners along with a softening in demand in the key markets – the Netherlands, France, and Germany.
For Q4/23, the company expects revenue to be in the range of $300-$350M, significantly worse than the consensus estimate of $601.24M.
"While '25 may represent a return to annual growth, our confidence in the velocity of the recovery is low," Piper Sandler analysts said.
"Given limited visibility and a full valuation given no near-term growth, we are throwing in the towel and downgrading ENPH to Neutral... We look for confirmation of revenue stability and declining US resi financing costs to get more constructive on the name."
This marks the fourth downgrade for ENPH this month. Barclays analysts cut the price target to $81 per share on the Equal Weight-rated stock.
The third quarter "essentially saw no de-stocking in the US, and combined with the demand weakness in Europe, this has pushed out destocking for at least another 2 quarters," the analysts commented.
Additional reporting by Senad Karaahmetovic