20 Sep

Will Enphase Energy Stock Continue to Soar?

WRITTEN BY Vineet Kulkarni

Enphase Energy (ENPH) stock has had a solid week, gaining more than 20% so far. The recovery in the stock is notable after seeing an almost 25% correction since its all-time high late last month. Enphase Energy stock is among the biggest gainers of 2019, rising more than 470% YTD (year-to-date).

Will Enphase Energy Stock Continue to Soar?

Solid demand continues

Enphase Energy stock rose approximately 8% on September 19. Solar panel maker and installer Sunpro Solar announced that it has installed as many Enphase’s solar systems in the last year as it has since its founding in 2008. Enphase is Sunpro Solar’s exclusive inverter supplier.

Solar microinverter maker Enphase Energy has been reporting solid earnings growth in the last few quarters. The significant demand increase in solar energy has put solar inverter makers in focus this year. Shares of these key technology providers have significantly outperformed solar panel maker stocks so far this year.

Enphase Energy reported record earnings growth in Q2 2019 and increased its guidance for the rest of the year. Enphase’s peer SolarEdge Technologies (SEDG) stock also rose 8% yesterday. The stock is up about 150% so far this year. Solar stocks were among the bright spots among the broader markets this year.

To learn more about SolarEdge’s Q2 earnings, please read SolarEdge’s Earnings: Will Stock Follow Peers after Q2? The Invesco Solar ETF (TAN) gained 3% and closed near its three-year high. Enphase and SolarEdge together form almost 17% in TAN ETF.

Activist short-seller Citron Research noted last week that Generac Holdings (GNRC), the new entrant in the solar inverter space, could create a significant threat to Enphase and SolarEdge. It sees a long-term downside of 80% and 55%, respectively, in these two existing players. To learn more, read Generac Challenges Enphase Energy, SolarEdge Duopoly

Technical indicators

Enphase Energy stock is currently trading marginally above its 50-day and 82% above its 200-day moving average levels, respectively. If the stock trades comfortably above its 50-day levels, it might see short-term strength. Plus, its 200-day level close to $14.70 could act as a support in the short to medium term. Enphase’s RSI (relative strength index) is around 58, indicating that the stock is neither overbought nor oversold.

SolarEdge stock is trading close to overbought levels with its RSI of 69, indicating that the stock could witness a trend reversal. It is trading significantly above its 50-day and 200-day moving average levels, implying strength in the stock.

Enphase Energy stock: Analysts’ price targets

Wall Street analysts gave Enphase Energy a mean price target of $30.80, which indicates a potential upside of almost 14% for the next 12 months. ENPH closed at $27.10 on September 19. Among 10 analysts covering Enphase, seven recommended a “buy,” one recommended a “strong buy,” one recommended a “hold,” and one recommended a “sell.”

On September 16, J.P. Morgan initiated coverage on Enphase Energy stock with an “overweight” rating and a price target of $32.00 for December 2020.

SolarEdge Technologies has a mean price target of $86.60 against its current market price of $89.40, which indicates a downside of 3.2% for the next year. Of the 11 analysts tracking SEDG, six recommended the stock as a “buy,” two recommended a “strong buy,” and three recommended a “hold.” None of the analysts recommended SolarEdge stock as a “sell” on September 20.

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