Susquehanna analysts downgraded Enphase Energy (NASDAQ:ENPH) from a Positive to a Neutral rating, setting a reduced price target of $104, down from $147. This adjustment reflects broader trends and challenges impacting the alternative energy sector, with project delays and tepid demand in residential solar weighing on near-term growth prospects.
Ahead of the third-quarter 2024 reports, scheduled on October 22, the analysts noted that project delays have continued to pose significant obstacles for utility-scale energy initiatives, with many projects likely to be pushed further into 2025 as timelines extend. Election-related uncertainties have also dampened project approvals, particularly for smaller developers, affecting market confidence.
In the residential sector, solar demand recovery remained slow, although signs pointed to a potential upturn in demand heading into 2025. Current estimates suggest residential installations may decline by over 20% year-over-year in 2024 but could recover by about 9% in 2025. This anticipated rebound is expected to be supported by lower interest rates, rising utility prices, and expanded access to third-party ownership (TPO) financing options.
One bright spot for Enphase’s residential market was storage, with Tesla’s Powerwall 3 capturing market share as a competitive force in energy storage. Given the sluggish demand recovery and intensifying competition in the storage space, particularly from Powerwall 3, Susquehanna’s outlook on Enphase’s performance has moderated, resulting in the downgrade.