In the wake of Enphase Energy's (ENPH, Financial) first-quarter earnings shortfall, Barclays has revised its price target for the company from $58 to $51, while maintaining an Overweight rating on the stock. This adjustment reflects ongoing shifts in Enphase's strategic supply management and pricing structure.
The company plans to normalize its battery margins, which involves a 12% increase in average sales prices. Additionally, Enphase intends to mitigate the impact of a 145% tariff on Chinese imports by sourcing battery cells from other regions. This change is expected to raise cell costs by around 20%, with other material costs anticipated to grow by approximately 10%.
Barclays notes that Enphase has been exploring options to diversify its cell supply chain since the end of the previous year, indicating that such strategies have been under consideration for several months. This proactive approach is part of the company’s efforts to navigate cost challenges and improve profitability in a competitive market.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 35 analysts, the average target price for Enphase Energy Inc (ENPH, Financial) is $60.64 with a high estimate of $105.00 and a low estimate of $33.00. The average target implies an upside of 32.54% from the current price of $45.75. More detailed estimate data can be found on the Enphase Energy Inc (ENPH) Forecast page.
Based on the consensus recommendation from 40 brokerage firms, Enphase Energy Inc's (ENPH, Financial) average brokerage recommendation is currently 2.9, indicating "Hold" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Enphase Energy Inc (ENPH, Financial) in one year is $106.42, suggesting a upside of 132.61% from the current price of $45.75. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Enphase Energy Inc (ENPH) Summary page.
ENPH Key Business Developments
Release Date: April 22, 2025
- Revenue: $356.1 million for Q1 2025, including $54 million of Safe Harbor revenue.
- Gross Margin: 49% on a non-GAAP basis, 47.2% on a GAAP basis for Q1 2025.
- Operating Expenses: 22% of revenue on a non-GAAP basis for Q1 2025.
- Operating Income: 27% of revenue on a non-GAAP basis for Q1 2025.
- Net Income: $89.2 million non-GAAP, $29.7 million GAAP for Q1 2025.
- Earnings Per Share (EPS): $0.68 non-GAAP, $0.22 GAAP for Q1 2025.
- Free Cash Flow: $33.8 million for Q1 2025.
- Cash and Equivalents: $1.53 billion at the end of Q1 2025.
- Microinverters Shipped: Approximately 1.53 million units in Q1 2025.
- Batteries Shipped: 170.1 megawatt hours in Q1 2025.
- Q2 2025 Revenue Guidance: $340 million to $380 million.
- Q2 2025 Gross Margin Guidance: 42% to 45% GAAP, 44% to 47% non-GAAP.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Enphase Energy Inc (ENPH, Financial) reported a strong quarterly revenue of $356.1 million, shipping approximately 1.53 million microinverters and 170.1 megawatt hours of batteries.
- The company achieved a 49% gross margin and generated free cash flow of $33.8 million in Q1 2025.
- Enphase Energy Inc (ENPH) is expanding its product offerings, including the launch of the fourth-generation IQ battery and the IQ9 microinverter, which are expected to drive future growth.
- The company is actively diversifying its supply chain to mitigate the impact of tariffs, with plans to source battery cells from outside China by Q2 2026.
- Enphase Energy Inc (ENPH) is seeing growth in international markets, particularly in Europe, with new product introductions like the Flex phase battery and IQ EV charger.
Negative Points
- Enphase Energy Inc (ENPH) faces challenges from newly announced tariffs on products from China, which are expected to impact gross margins by 6% to 8% starting in Q3 2025.
- The US solar market is under pressure due to high interest rates and financial challenges faced by large national lease providers, impacting customer demand.
- The company's Q2 2025 revenue guidance is lower than Q1, with expected revenue between $340 million to $380 million, indicating potential demand softness.
- Enphase Energy Inc (ENPH) reported a decrease in US revenue by 13% in Q1 compared to Q4, primarily due to seasonality and softening customer demand.
- The company is experiencing elevated microinverter channel inventory, which could indicate slower sell-through and potential future inventory management challenges.
