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On Wednesday, BMO Capital Markets adjusted its outlook on Enphase Energy (NASDAQ:ENPH), reducing the price target to $46.00 from the previous $59.00, while maintaining a Market Perform rating on the company’s stock. The stock, currently trading at $47.99, has experienced significant pressure, falling nearly 53% over the past year and trading near its 52-week low of $47.48. According to InvestingPro analysis, the company appears undervalued based on its Fair Value calculation. The change reflects a more challenging second half of 2025 anticipated by BMO analysts, who cited several headwinds facing the company.
The firm’s analyst noted that the updated assessment is even more cautious than their previous expectations for Enphase Energy’s second-quarter guidance. The identified challenges include negative impacts from tariffs, a decrease in safe-harbor related revenues, market share loss, and customer financial distress. These concerns are reflected in the company’s recent performance, with revenue declining 41.92% in the last twelve months. These factors are expected to create a difficult environment for Enphase Energy relative to the consensus estimates.
In response to these concerns, BMO has revised its financial forecasts for Enphase Energy. The firm has decreased its revenue estimates for fiscal years 2025 and 2026 by 5% and 7%, respectively. This reflects a dimmer view on the company’s financial performance in the upcoming years.
Additionally, the estimated gross margins for Enphase Energy have been lowered by 600 basis points for fiscal year 2025 and by 550 basis points for fiscal year 2026. These adjustments suggest that the firm anticipates a reduction in profitability for the company during this period.
In conclusion, the BMO analyst stated, "Tough Going Getting Even Tougher; Lowering Our Estimates; Overall negative update even relative to our already cautious outlook for 2Q guidance as negative tariff impact, fall off safe-harbor related revenues, loss of share and customer financial distress to us implies a challenging 2H of 2025 relative to consensus estimates. We have lowered our FY 2025 and 2026 revenue estimates by 5% and 7%, respectively. We reduced our estimated gross margins for FY 2025 and 2026 by 600 bps and 550 bps, respectively. Our updated target price falls to $46/share from $59 prior and remain Market Perform rated." For deeper insights into Enphase Energy’s valuation and prospects, InvestingPro subscribers can access comprehensive analysis, including 16 additional ProTips and detailed financial metrics in the Pro Research Report. This statement encapsulates the rationale behind the revised price target and the ongoing Market Perform rating for Enphase Energy stock.
In other recent news, Enphase Energy reported first-quarter earnings of $0.68 per share on revenues of $356 million, which fell short of expectations. Analysts at Northland highlighted a decrease in gross margin as a key factor, attributing it to lower production tax credits and product mix. The company also provided a less optimistic outlook for the second quarter, with ongoing challenges in the solar industry, including tariffs and subdued demand. Despite these hurdles, Enphase Energy has introduced new products and expanded into new markets to manage the situation. Analysts from Craig-Hallum, Oppenheimer, and Canaccord Genuity have all adjusted their price targets for Enphase Energy, citing factors such as high interest rates and market consolidation. However, they maintain a positive outlook, with Craig-Hallum and Canaccord Genuity retaining a Buy rating and Oppenheimer an Outperform rating. KeyBanc Capital Markets maintained a Sector Weight rating, noting the company’s mixed revenue results and ongoing macroeconomic challenges. Enphase Energy is actively working on strategies to navigate tariffs and supply chain issues, including launching new products like the IQ9 microinverter and Gen 4 battery.
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