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Needham & Company Keeps Top Rating on Enphase Energy (ENPH) Amid Dramatic Sell-Off

August 24, 2015 6:34 AM EDT
Get Alerts ENPH Hot Sheet
Price: $121.10 +1.09%

Rating Summary:
    26 Buy, 17 Hold, 2 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 13 | Down: 10 | New: 11
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Needham & Company analyst Y. Edwin Mok highlighted three reasons why they still rate Enphase Energy (NASDAQ: ENPH) at 'Strong Buy' with price target of $13.00.

Mok notes shares have been under tremendous pressure recently due to 1) sharp decline in the overall solar group; 2) investor concerns over pricing pressure in the inverter space; 3) increased skepticism over the need for microinverters (and MLPE) as leading installers choose to use more string inverters; and 4) worries over demand after ITC expires at the end of 2016.

The three reasons why they are keeping their Strong Buy rating:

  • Continues to grow despite all the fear. Over the last few quarters, ENPH lost significant market share at its largest customer VSLR [N/R] and we estimate the sales to VSLR will decline 45% YoY in 2015; however, total revenue in 2015 is projected to grow 18%/15% based on consensus/our estimates...
  • Concerns over pricing pressure in the inverter space might be overblown. The bear case for ENPH centered around an expectation for prices of string and DC-optimized inverters to decline sharply in 2H15 and 2016, with an expectation that ENPH's microinverters, being the most expensive, would see the greatest pricing/margin pressure. However, we note that market leader SMA [N/R] raised 2015 guidance in July and is now projecting to grow modestly this year...
  • AC Battery as a growth driver is largely ignored by the Street. We believe ENPH's AC battery has several architectural advantages over most competitive solutions...

For an analyst ratings summary and ratings history on Enphase Energy click here. For more ratings news on Enphase Energy click here.

Shares of Enphase Energy closed at $4.42 yesterday.



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