How’s Enphase Energy Stock Placed before 2020?



Enphase Energy (ENPH) investors must be hoping for a similar stock run in 2020—compared to 2019. Almost everything has been perfect for the company this year. Enphase Energy reported solid revenue growth, which translated into bottom-line growth. The stock rose as much as 650% this year until August. However, despite a steep correction later, the stock has still risen 420% this year. Will the company achieve a similar feat next year?

Article continues below advertisement

Enphase Energy stock in 2020 

Enphase Energy was profitable in the fourth quarter of 2018. The company’s revenue growth in the first three quarters of 2019 averaged around 70% compared to the same period in 2018. Enphase Energy’s supply agreements and recent product launches could boost its revenues for the next few years.

Recently, the company announced that more than 700 solar installers in the US use its AC Modules. AC Modules are a combination of microinverters and photovoltaic modules. The company launched a battery storage system, “Ensemble Solar,” last month. The system keeps homes powered when the grid is down. Meanwhile, the system has the ability to save money when the grid is up.

Also, Enphase Energy signed a supply agreement with Sunrun (RUN) last month. Under the agreement, Enphase Energy will provide its seventh-generation IQ microinverters to Sunrun’s residential solar business. Enphase Energy’s management aims to enter eight new countries in Europe next year and double revenues from the region.

Enphase Energy is a key technology provider for solar installers and panel makers. As the solar industry flourishes in the next few years, it could bode well for inverter makers.

Article continues below advertisement

Fair revenue growth

According to analysts’ estimates, Enphase Energy will report total revenues of $784 million next year—27% higher YoY. The company’s net income will likely grow to $135 million next year based on analysts’ estimates. The estimates represent more than 20% growth YoY.

SolarEdge Technologies (SEDG) has risen almost 160% YTD. In comparison, SolarEdge’s total revenues grew around 60% YoY to above $1 billion in the nine months ending on September 30. For 2020, analysts expect the company’s revenues to increase to $1.66 billion—approximately 17% higher YoY. Based on the estimates, Enphase Energy’s net income will likely grow to $256 million—almost 30% higher than 2019.

Enphase Energy and SolarEdge are among the top-rallied solar stocks this year. Read ENPH or SEDG: Which Stock Is More Attractively Valued? to learn about how these two stocks stack up from the valuation standpoint after a steep rally.

Enphase Energy stock: Analysts’ target prices

Cowen and Company increased the target price for Enphase Energy stock from $27 to $28 on December 13. The target price indicates a potential upside of 13% from its current price of $24.6. Analysts have given the company a mean target price of $30.8 for the next year.

In comparison, SolarEdge stock offers a potential upside of 3% based on analysts’ mean target price of $92.8. The stock closed at $90.2 last week.

To learn about how solar stocks played out this year, read Solar Stocks: Analyzing the Top Gainers of 2019.


More From Market Realist