Enphase Energy (ENPH), a leading provider of solar and storage solutions, has been downgraded by RBC Capital Markets analyst Christopher Dendrinos. Dendrinos shifted his rating to ‘Sector Perform’ from ‘Outperform,’ and lowered the price target to $100 from $125, reflecting concerns about the company’s future growth prospects.
The analyst’s downgrade is driven by an anticipated slowdown in Enphase’s growth rate next year due to competitive market dynamics. Dendrinos believes that Enphase’s market share could be impacted by the increasing popularity of Tesla’s Powerwall 3 batteries, particularly in California. He estimates that approximately 6% of Enphase’s inverter installations in the state are linked to projects using Powerwall 2 batteries. If Tesla successfully transitions customers to its newer Powerwall 3 model, Enphase could experience a significant loss in this segment of the market.
While the analyst acknowledges the strong demand for batteries in the market, driven by factors like NEM 3 adoption, he cautions that this growth may start to slow down in the future. Enphase has benefited from NEM 3 adoption and successful market share gains in California, where its IQ Battery 5P has been well-received.
Dendrinos forecasts revenue of $1.825 billion for 2025, which is 8% below consensus estimates. He predicts revenue of $2.05 billion for 2026, a figure 13% lower than current market expectations.
Enphase shares reacted negatively to the downgrade, closing down 8.79% at $92.55 on Tuesday. This news comes at a time when the broader semiconductor sector is also experiencing a downturn following ASML’s revised 2025 outlook.
While the downgrade is a setback for Enphase, it’s important to note that the company remains a leader in the solar and storage market. The analyst’s concerns highlight the competitive nature of the industry and the importance of adapting to evolving technologies and consumer preferences. Enphase will need to navigate these challenges effectively to maintain its strong position in the market.
