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Enphase said high interest rates are discouraging people from installing solar panels.
Courtesy Enphase
Enphase Energy’s stock is taking a hit because the maker of solar inverters said it would cut shipments to address a buildup of inventory, forecasting less quarterly revenue than Wall Street had expected.
Analysts expect shares to remain under pressure in the near term.
After the market closed on Thursday,
Enphase
(ticker: ENPH) said revenue for the third quarter, which ends in September, should be within a range of $550 million to $600 million. The consensus call among analysts tracked by
FactSet
was for nearly $646 million.
In a call with analysts and investors to discuss the results, CEO Badrinarayanan Kothandaraman said the shortfall is due to weak demand for solar-power equipment in the U.S. as high interest rates dissuade customers from installing the systems. Conditions are particularly tough in states like Texas, Florida, and Arizona because utility rates are lower there, he said.
The seller of microinverters, which convert the sunlight hitting a homeowner’s solar panel into usable power, said inventory has been building up in its distribution channels as sales have slowed down in the past two quarters. Microinverter sell-through rates in the U.S. in the first half of 2023 were approximately 20% below the peak seen in the fourth quarter of last year, the company said.
It plans to respond by reducing shipments in the current quarter.
The shares were down 11% to $148.50 in early trading on Friday, putting the stock on pace for the lowest close since May 12, 2022, when it ended the day at $140.94, according to Dow Jones Market data. Shares of
SolarEdge Technologies
(SEDG), another seller of inverters, fell 5% on Friday.
“The biggest question on our mind is whether the measures taken by the Company will be enough to achieve a desired reset in channel inventory levels,” wrote KeyBanc Capital Markets Analyst Sophie Karp in a note on Thursday.
Karp rates the stock at Overweight with a $267 target for the price based on the company’s potential for long-term growth. But she expects the stock to be under pressure in the near term until clarity emerges on demand or inventory.
Guggenheim’s Joseph Osha also expects the stock to trade at its current depressed level. In a research note on Friday, he said there is a possibility that Enphase’s market share will decline modestly next year as competition ramps up and large developers like
SunRun
(RUN) and
Sunnova Energy International
(NOVA) make headway in the market.
He rates the stock at Neutral and doesn’t have a target for price.
Enphase said after the close on Thursday that it earned $1.47 a share in the second quarter from $711 million in revenue. Analysts had expected a per-share profit of $1.28 and $726 million of revenue.
Write to Karishma Vanjani at [email protected].
Source: https://www.barrons.com/articles/enphase-energy-earnings-solar-power-83be8d5c?siteid=yhoof2&yptr=yahoo