Needham & Company Remains Sidelined on Enphase Energy (ENPH)
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Needham & Company reiterated a Hold rating on Enphase Energy (NASDAQ: ENPH) following the company's announced new restructuring initiatives, preliminary 4Q16 guidance, and launched secondary equity offering. ENPH expects to record $3MM of restructuring charges in 3Q16 and the program will complete in 4Q16. For 4Q16, the company guided revenue at $90-100MM, above consensus of $91.9MM likely due to strong AC battery traction. The secondary public offering is of an undisclosed amount.
Analyst Edwin Mok commented, "After market close yesterday, ENPH announced new restructuring initiatives, issued preliminary 4Q16 guidance, and launched a secondary equity offering. As we had outlined in our SPI recap note here, the U.S. residential solar market is showing signs of sluggish growth that could persist into 2017. We believe restructuring is necessary to lower breakeven for the model and address the ongoing cash burn until the market recovers. We believe the secondary offering will help shore up its balance sheet by providing working capital to ramp the AC battery and the Gen-6 microinverters. As ENPH continues to navigate tough industry conditions, we prefer to remain on the sidelines until we see signs of recovery. Maintain our Hold."
Shares of Enphase Energy closed at $1.67 yesterday.
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