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Investing.com - JPMorgan downgraded Enphase Energy (NASDAQ:ENPH) from Overweight to Neutral on Tuesday, while significantly reducing its price target to $37.00 from $64.00. The stock, which has declined nearly 39% year-to-date and trades at a P/E ratio of 38x, currently sits within the broader analyst target range of $28-$95.
The downgrade reflects concerns about potential market disruption from changes to solar policy, with JPMorgan estimating approximately 40% of Enphase’s U.S. revenue comes from the lease/power purchase agreement (PPA) market segment. According to InvestingPro data, the company maintains a healthy current ratio of 1.9, indicating strong ability to meet short-term obligations despite market uncertainties.
JPMorgan’s model assumes half of Enphase’s 25D tax credit sales could be eroded under new legislation, with the remainder transitioning to lease/PPA arrangements at lower margins, though the firm noted Enphase’s 45x manufacturing credits remain unchanged from the Inflation Reduction Act.
The investment bank reduced its year-end 2025 price target based on lowered fiscal year 2026 estimates and assigned a reduced P/E multiple of 20x, down from 25x, citing "reduced near-term visibility" in the solar market.
Despite the downgrade, JPMorgan acknowledged Enphase "remains an industry leader with sustained above-average margins" and recommended long-term investors maintain existing positions, though it advised against adding to positions until market visibility improves. InvestingPro analysis reveals 16 additional key insights about Enphase’s financial health and market position, available exclusively to subscribers.
In other recent news, Enphase Energy has expanded the production shipments of its IQ EV Charger 2 to several European countries, including Greece, Romania, Ireland, and Poland. The charger, which can work with Enphase solar and battery systems or as a standalone device, has received E.V. READY certification in France. Meanwhile, Jefferies has lowered its price target for Enphase Energy to $35, maintaining an Underperform rating due to concerns about the expiration of the 25D tax credit. Goldman Sachs has also downgraded Enphase Energy from Buy to Sell, with a new price target of $32, citing supply chain adjustments and lower margin expectations due to recent tariffs.
Additionally, Wells Fargo (NYSE:WFC) reports that Enphase’s market share in the California inverter segment has decreased to 30%, down from 32%, as Tesla (NASDAQ:TSLA) gains ground. Enphase’s fourth-generation battery, the IQ 10C, is rolling out commercially with a competitive installation cost, potentially increasing sales in the coming months. However, TD Cowen has downgraded Enphase Energy to Hold from Buy, reducing its price target to $45, due to concerns over the 25D tax credit expiration and its impact on the residential solar market. These developments highlight the challenges and strategic adjustments Enphase is navigating in the evolving solar energy landscape.
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