Piper Sandler downgrades Enphase Energy, cites uncertain outlook for U.S. residential solar market
It’s time to step to the sidelines on solar power stock Enphase Energy , according to Piper Sandler. Analyst Kashy Harrison downgraded shares to neutral from overweight, saying the U.S. residential solar power market could undergo a reset this year on weaker demand. “We still view ENPH as a company with solid products, strong mgmt, best-in-class ops, and an attractive market position; however, we believe US resi demand uncertainty is too elevated. We look for US resi demand stabilization to revisit our rating,” Harrison wrote. ENPH 1D mountain Enphase shares fall The analyst cited recent data from GoodLeap that showed a drop in December loan originations compared to August. GoodLeap is a provider of financing options for the residential solar energy industry that holds about 30% market share, according to the note. “Last Friday post-close, KBRA published its preliminary rating on Goodleap’s new ABS, including a chart indicating a sharp decline in Dec’22 loan originations vs. the Aug’22 peak. Further, solar originations in Dec’22 appear > 10% below Dec’21,” Harrison wrote. “While we expected a deceleration in Cal’23 US resi growth (see note) partially due to higher financing costs adversely impacting regions with marginal economics, we did not anticipate this degree of demand weakness,” he added. Enphase Energy shares are down 17% this year. The analyst lowered his price target to $255, down from $350, meaning shares have about 16% upside from Tuesday’s close. Shares were down more than 4% in Wednesday premarket trading. –CNBC’s Michael Bloom contributed to this report.