Is ENPH Stock Set to Run after Earnings? We’ll soon find out. But first, let’s take a look at some of the potential tailwinds that could push the stock back up to $140 a share.
Let’s start with Europe, where the solar industry has more than delivered on promises of fossil fuel reduction.
The increase in European solar capacity is actually quite strong now. Even during the winter the technology can now satisfy most of the growth in electricity demand. This, according to a recent piece in Bloomberg, entitled “New Solar to Meet Most of Europe’s Power Demand Growth in Winter.”
Here’s a snippet from that article …
The expansion of solar power, led by Germany, is upending traditional energy economics in Europe. Its lower cost relative to nuclear and fossil-fuel generation — as well as an encouraging regulatory framework — has driven a surge in installations. Meanwhile many coal-fired plants have been retired.
With renewables’ capacity growth outpacing gains in consumption, the region is looking well-supplied during the peak demand season.
Good news indeed for an industry that has struggled this year. Mostly as a result of higher interest rates in the U.S., and an economic slowdown in China.
Still, long-term growth projections remain positive. Bloomberg has suggested new installations could reach 627 GW in 2025 and 880 GW in 2030. To be sure, even with a rough year, solar continues to grow faster than anything else. Wind, natural gas, coal, nuclear and hydro.
In fact, the IEA’s latest World Energy Outlook indicates solar overtaking coal, natural gas, nuclear, wind, and hydro by 2033. That would make solar the largest source of electricity in the world.
Of course, despite the rapid growth of solar, it’s been a bumpy ride for solar investors. With a very real solar panel glut that has weighed on the industry this year, coupled with high interest rates in the U.S. and an economic slowdown in China, the solar market has been a risky one to invest in this year. And I don’t believe we’ll see any stabilization in prices until later in 2025.
Why ENPH Stock Could Run after Earnings
One stock that’s struggled a bit this year as a result of all of this is Enphase Energy (NASDAQ: ENPH).
If you’re unfamiliar, Enphase Energy is the biggest supplier of microinverter-based solar and battery systems in the world. And despite the stock being down about 30% for the year, it’s still a solid stock to own. That is, if you find the data on solar growth to be sound.
Now Enphase will announce Q3 earnings today. Analysts are expecting EPS of $0.78 and a 28.6% year-over-year decline in revenue. This would put revenue at around $393.5M. I don’t think ENPH has to do much more than match those expectations to stabilize. And really, that’s what we’re looking for now. Because our checks do indicate a significant pickup in solar installations around Q3, 2025.
If ENPH meets or exceeds expectations, the stock could easily climb back up to the $100 level. This would likely set the stage for increased investor attention from both institutions and retail. Should ENPH fall short, we could see the stock tumble below $80, and likely stabilize at around $77. Assuming that were to happen, it would be a screaming buy as we head into 2025.
Long-term, I’m bullish on Enphase and wouldn’t be surprised to see the stock revisit $140 a share by this time next year. That would give you an estimated gain of 55%.
