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Enphase Energy's Metrics Are Mixed After Guidance Miss Pulls Down Shares
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Enphase Energy’s (US:ENPH) shares have cratered in recent days after the solar inverter maker’s second quarter revenue came in slightly below analysts’ average estimate and it provided lower-than-expected third quarter revenue guidance, citing the negative impact of high U.S. interest rates on solar projects.
And with ENPH stock down more than 37% in the last six months, the shares garnered a very low Momentum score on Fintel’s quant dashboard. At the same time the number of put options on the name has jumped.
Industry exchange-traded fund Global X Solar (US:RAYS) is down almost 24% in the period. ENPH stock is the fourth-biggest holding in that fund, at 7.7% of the net assets.
But Enphase still ranks on the Fintel Quality score and Goldman Sachs defended the firm on weakness in the wake of its results. And finally, the fundamentals of the global solar energy market remain strong.
Top Line, Guidance Miss Cause ENPH to Tumble
On July 27, Enphase reported Q2 revenue of $711 million, slightly below analysts’ mean outlook of $726 million. More ominously, the firm provided Q3 sales guidance of $550 million to $600 million, well below the average estimate of $746 million.
What’s more, the solar inverter maker had previously predicted that it would generate $700 million to $750 million of revenue this quarter.
The company cited high interest rates in the U.S. as the main reason for the shortfalls.
ENPH’s shares have sunk sharply in the wake of the data, retreating from $166.80 at the close on July 27 to $140.36 by the Aug. 3 close. And following the downturn, the stock’s Momentum on the Fintel scoring model has dipped to 32.68.
Also noteworthy is that, on Aug. 1, there were 147,782 open put options on ENPH. Excluding July 27, the day after the company reported its Q2 results, that was the highest number of put options on the shares since at least July 3.
Strong Quality Score as Goldman Defends
Despite the top line and guidance misses, Enphase stock has a very high Quality score of 94.52 on Fintel. Renewable energy peers don’t come close to that; First Solar (US:FSLR) shows up at 69.66 while Solaredge (US:SEDG) is clocking in far below, at 44.01.
Meanwhile, Goldman kept a ‘buy’ rating on ENPH stock. The firm, however, did trim its price target on the shares to $217 from $250. But the bank’s new price target is still well above the stock’s current price.
Solid Solar Fundamentals
Solar’s long-term outlook remains positive, as global solar capacity will more than double from 2022 to 2027, the International; Energy Agency is predicting. Further, in 2027, solar will become the largest source of electric power by 2027.
What’s more, both Enphase and SolarEdge reported that while U.S. residential solar demand had weakened due to high interest rates, the demand for utility-scale solar projects remained strong in America, while the European solar market was healthy overall.
And finally, many experts think that the Federal Reserve will cut rates next year, so the U.S. solar sector could rebound a great deal in 2024.
This article originally appeared on Fintel
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