Morgan Stanley has revised its rating for Enphase Energy (ENPH, Financial), dropping it from Equal Weight to Underweight. The financial services firm has also adjusted its price target for the company, reducing it sharply from $67 to $36.
The downgrade stems from a variety of factors, including deteriorating demand in end markets and potential adverse effects on earnings due to tariffs. Additionally, Enphase Energy's significant reliance on components of the Inflation Reduction Act could pose risks if there are changes to the legislation.
Despite recognizing the robust balance sheet of Enphase Energy as a competitive advantage over its peers, Morgan Stanley forecasts potential declines in the stock's valuation. This is attributed to multiple compression and a pessimistic outlook for the residential solar sector, which could lead to lower consensus estimates.
