Key insights
- Oppenheimer downgraded Enphase Energy to Perform from Outperform, citing a Q3 miss and significantly weaker-than-expected guidance. The analyst noted that a recovery in Enphase's core business is not materializing, with ongoing price cuts on energy storage impacting gross margins. Disappointing U.S. solar installations, attributed to higher interest rates and financing challenges, are also a concern. Enphase shares fell over 20% in premarket trading following the news.
Investing.com -- Oppenheimer downgraded Enphase Energy to Perform from Outperform and removed its price target after the solar equipment maker missed third-quarter expectations and guided well below the Street, saying a recovery in its core business "is not materializing."
The disappointing print sent shares tumbling more than 20% in premarket trading Wednesday.
Enphase "missed 3Q26 Street expectations while guiding well below expectations and indicating baseline demand of ~$200M revenue/quarter for its core businesses," analyst Colin Rusch said.
Third-quarter revenue was $293 million, versus consensus of $305 million and company guidance of $290 million to $320 million. Adjusted earnings per share were $0.41, short of the Street’s $0.50, and adjusted gross margin was 45% versus 44.4% expected.
Looking ahead, Enphase’s fourth-quarter revenue guidance of $225 million to $255 million fell well short of consensus estimate of $297 million. Gross margin guidance of 40% to 43% is also below the Street’s 45.7%.
Rusch said Enphase has worked to maintain price and margin discipline, but that "ongoing price cuts on energy storage are beginning to impact gross margin." He cited disappointing U.S. solar installations, hurt by higher interest rates and modest adoption of new financing mechanisms.
The company is considering further storage price cuts during a roughly three-quarter transition to its next-generation product, as higher rates and uncertainty over foreign-entity-of-concern rules keep pressure on U.S. residential demand. Oppenheimer now models additional reorganization costs in the fourth quarter to support 2027 profitability targets.
Enphase outlined about $200 million in 2027 initiatives, including a fifth-generation battery driving 50% growth in residential storage, a commercial solar and storage ramp and bidirectional chargers. Its solid-state transformer project continues to progress, with a pilot expected in early 2027 and first revenue in 2028, Rusch said.
Oppenheimer cut its fiscal 2026 revenue and EPS estimates to $1.104 billion and $1.60 from $1.203 billion and $2.08. For 2027, it now sees $885 million and $1.11, down from $1.242 billion and $2.37.
The first quarter is seasonally weak, and the demand effect of price cuts has not yet been verified, Rusch noted. Given the residential market’s history of volatility, "we expect investors to wait for validation of demand before stepping in to buy shares," he wrote.
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