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On Wednesday, Mizuho maintained its positive stance on Enphase Energy (NASDAQ:ENPH), raising the company's price target from $147.00 to $151.00 while reiterating an Outperform rating.
The adjustment follows Enphase Energy's recent performance, where second-quarter sales fell short of expectations. Despite this, the company successfully managed channel destocking as advised, and battery sales exceeded forecasts. Additionally, Enphase bought back 0.7% of its shares.
The company's third-quarter guidance suggests a dip in solar sales compared to the second quarter, but this is expected to be balanced by stronger battery sales. Looking forward, management anticipates revenue growth in the fourth quarter, with estimates of around $454 million.
However, reaching a quarterly revenue run rate between $450 million and $500 million is projected to be an event for the first half of 2025. This forecast is contingent on several factors, including lower interest rates, expansion in Europe, increased third-party ownership (TPO) market share due to domestic content requirements, and continued growth in battery sales.
Mizuho's revised price target to $151 reflects an optimism based on anticipated higher gross margin percentages in 2025, which should result from increased domestic content. This positive outlook is slightly tempered by expectations of a slower demand recovery. The firm maintains its Outperform rating, signaling confidence in Enphase Energy's market performance and strategic initiatives.
In other recent news, Enphase Energy reported its financial results for the second quarter of 2024, with revenue reaching $303.5 million. This figure, however, did not meet the expected $310.32 million. The company also reported an adjusted earnings per share (EPS) of $0.43, falling short of the consensus estimate of $0.49. Despite these results, the company's revenue saw a significant increase from the first quarter of 2024, which was at $263.3 million.
In further developments, Enphase Energy has projected its revenue for the third quarter of 2024 to be between $370 million and $410 million. The anticipated non-GAAP gross margin is expected to range from 47.0% to 50.0% with the net Inflation Reduction Act (IRA) benefit and 39.0% to 42.0% excluding it.
The company also forecasts GAAP operating expenses to be in the range of $138 million to $142 million and non-GAAP operating expenses to be between $79 million to $83 million.
Enphase Energy's CEO, Badri Kothandaraman, stated that their second-quarter performance reflects strong demand for their microinverter-based solar and battery systems. Looking ahead, the company's financial outlook for 2024 includes an annualized effective tax rate with IRA benefit, excluding discrete items, expected to be within a range of 17.0% to 19.0%.
InvestingPro Insights
Enphase Energy (NASDAQ:ENPH) has been navigating a challenging market landscape, as reflected in recent financial metrics. The company's market capitalization stands at $14.1 billion, with a high price-to-earnings (P/E) ratio of 51.77, indicating a premium valuation by the market. Despite a significant revenue decline over the last twelve months as of Q1 2024, with a decrease of 30.11%, Enphase's management has demonstrated confidence through an aggressive share buyback program.
InvestingPro Tips highlight that Enphase is trading at a high earnings multiple and that analysts are predicting a sales decline in the current year. However, the company has shown the ability to cover its interest payments comfortably with its cash flows, and its liquid assets exceed short-term obligations. These factors suggest a degree of financial stability even amidst volatility in stock price movements. For investors looking for more in-depth analysis, there are additional tips available on InvestingPro, which can be accessed with the coupon code PRONEWS24 for up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription.
The InvestingPro Fair Value estimate for Enphase stands at $116.3, which is below the current analyst target but still above the previous close price of $103.64. This disparity underscores the importance of thorough research and consideration of various valuation metrics. With 17 more InvestingPro Tips available, investors can deepen their analysis and potentially uncover unique investment opportunities.
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