Why Clouds Are Hanging on Enphase Energy Stock This Week
Key Points
Enphase's revenue soared in Q3 2025 to its highest level in two years.
The company expects a slow start to 2026.
Analysts revised their price targets downward.
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Beating analysts' estimates, Enphase Energy (NASDAQ: ENPH) reported revenue of $410.4 million and adjusted earnings per share (EPS) of $0.90. While the solar company shone brightly in the third quarter of 2025, management is bearish on the company's outlook for the first quarter of 2026 -- a factor figuring strongly in the stock's decline this week as well as in analysts' increasingly dour outlooks on Enphase stock.
According to data provided by S&P Global Market Intelligence, shares of Enphase Energy are down 16.9% from the end of last Friday's trading session through 3:13 p.m. ET today.
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Enphase's revenue soars, but investors' enthusiasm dwindles
Growing sales 7.8% year over year, Enphase recognized more quarterly sales than it has in the past two years, but this failed to outshine management's inauspicious outlook for the start of 2026. On the company's Q3 2025 conference call, Badri Kothandaraman, Enphase's CEO, stated, "The loss of the 25D tax credit is a near-term headwind that will impact our results in early 2026."
Although Kothandaraman was reluctant to provided comprehensive guidance for Q1 2026, he did project revenue of about $250 million for the first quarter of the new year. For context, Enphase reported revenue of $356.1 million in Q1 2025.
The other downward pressure on Enphase's stock comes from several analysts who reduced their price targets:
- Susquehanna lowered its price target to $33 from $37.
- RBC Capital dropped its price target to $31 from $33.
- JPMorgan Chase slashed its price target to $37 from $40.
With Enphase stock sinking, is now a good time to buy shares?
Trading at 8.9 times operating cash flow, Enphase stock is hanging on the discount rack considering its five-year average cash-flow multiple is 32.3. While the company anticipates a slowdown at the start of 2026, there's still plenty to like about Enphase stock. Solar investors would be wise to give the stock some real consideration right now while it's out of favor.
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JPMorgan Chase is an advertising partner of Motley Fool Money. Scott Levine has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends JPMorgan Chase. The Motley Fool recommends Enphase Energy. The Motley Fool has a disclosure policy.
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