Figma Shares Indicated To Open $105/$110
On Thursday, Citi analysts lowered the price target for Enphase Energy stock (NASDAQ: NASDAQ:ENPH) to $43 from $47 while maintaining a Sell rating. The stock, which has declined over 67% in the past year and currently trades at an EV/EBITDA multiple of 23.7x, faces mounting pressure. The decision reflects concerns over the future of the residential solar market in the United States. According to InvestingPro analysis, which offers comprehensive insights through its Pro Research Report covering 1,400+ stocks, the company maintains strong liquidity with a current ratio of 1.9.
The analysts addressed inquiries about the pricing of residential solar, potential improvements to the Inflation Reduction Act (IRA) provisions in the Senate, and Enphase Energy’s valuation under various scenarios. With an EBITDA of $226 million in the last twelve months and a P/E ratio of 39.2x, the company’s valuation metrics remain a key focus. They expressed skepticism that the deficit would increase further, noting that Medicaid appears to be a higher priority for senators.
If the bill passes in its current form, the analysts anticipate a significant decline in U.S. residential solar installations, estimating a potential 75% decrease next year. Such a downturn could lead to widespread business closures, slower innovation due to reduced research and development budgets, and challenging restructurings within companies.
The analysts also projected that, assuming no changes to the bill, Enphase Energy’s EBITDA could decline by approximately 60% next year. They suggested that the stock might trade in the high teens under these circumstances.
In other recent news, Enphase Energy is facing a challenging landscape due to potential policy changes and recent analyst actions. RBC Capital Markets has adjusted its outlook on Enphase Energy, lowering the price target to $50 while maintaining a Sector Perform rating. BMO Capital Markets downgraded Enphase’s stock from Market Perform to Underperform, reducing the price target to $39, citing potential impacts from the proposed termination of the Section 25D Residential Clean Energy Credit. Similarly, Barclays (LON:BARC) downgraded Enphase from Overweight to Underweight, setting a new price target at $40, reflecting concerns about future demand in the residential solar market.
The proposed legislative changes, particularly the early termination of 25D credits, could significantly affect Enphase and other solar companies. Analysts from BMO and Barclays express concerns that these changes may lead to a shift in the residential solar market towards third-party ownership models, potentially impacting Enphase’s market share. Meanwhile, First Solar (NASDAQ:FSLR) is also navigating industry shifts, with Wells Fargo (NYSE:WFC) highlighting potential capacity concerns. Changes in U.S. cell capacity forecasts and new facility investments could affect First Solar’s margins and market dynamics.
Wells Fargo’s report indicates a substantial increase in expected U.S. cell capacity by 2026, which might affect First Solar’s average selling price premium. The report also mentions potential benefits for First Solar from changes to the Investment Tax Credit as part of the Inflation Reduction Act amendments. However, the firm has noted delays in some solar projects and the impact of new tariffs, which could influence panel pricing.
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