Enphase’s earnings lifted much of the solar energy sector Wednesday.
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Solar specialist Enphase Energy
‘s earnings were so good that the entire sector was shining bright Wednesday.
Fremont, Calif.-based Enphase (ticker: ENPH)’s third-quarter results smashed Wall Street’s expectations, as the leader in home solar energy systems and a pioneer in inverter technology reported record revenue after markets closed Tuesday.
Enphase stock jumped 15% in U.S. premarket trading, helping the I
nvesco Solar exchange-tarded fund(TAN)—which counts Enphase as its second-largest holding—rise 3.9%.
The rest of the sector was beaming, too. First Solar (FSLR) jumped 4%, SunRun (RUN) lifted 3.3%, SolarEdge (SEDG) surged 4.7%, and Shoals Technologies (SHLS) climbed 1.8% in the premarket trade. All four companies are manufacturers of solar panels, batteries, or systems for solar energy projects.
In the third quarter, Enphase saw record sales of $352 million, up from $179 million a year ago and ahead of analyst expectations of $345 million, according to FactSet data. Net income was $22 million, beating estimates of $16 million, while an adjusted measure of net income showed $84 million in profit. Adjusted earnings per share (EPS) was $0.60, ahead of estimates of $0.49.
Enphase expects to set another record for revenue next quarter, with outlook for sales to be in the range of $390 million to $410 million.
Earnings came on the back of the company announcing a new type of energy system driven by its IQ8 solar microinverters, which convert the direct current (DC) generated by solar panels into alternating current (AC).
“Many homeowners often assume that their solar systems will function if the sun is shining, even during a power outage. This has unfortunately not been true until today. Now, with IQ8 homeowners can realize the true promise of solar—to make and use their own power,” Enphase’s president and CEO Badri Kothandaraman said.
Analysts at investment banking advisory group Evercore reiterated their “outperform” rating on Enphase shares, which they have given a price target of $216. Enphase stock ended Tuesday at $173.46, so Evercore’s target implies 25%-plus upside. The analysts said the company was “in the midst of a breakthrough new product cycle” with IQ8.
The team at Evercore, as well as analysts at asset manager Guggenheim Partners, also noted that the company continues to face supply-chain and logistics challenges, but that it was doing a good job of handling them.
Write to Jack Denton at [email protected]
