Enphase (ENPH) Rallies 11% on Earnings Beat and Higher Guidance, Needham Raises PT by Over 100%

February 10, 2021 9:49 AM EST
Get Alerts ENPH Hot Sheet
Price: $157.18 -0.59%

Rating Summary:
    24 Buy, 12 Hold, 0 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 16 | Down: 12 | New: 22
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Shares of Enphase (NASDAQ: ENPH) are up 11% early Wednesday after the solar power company reported higher-than-expected earnings for its fourth quarter.

The company reported EPS of $0.51 on sales of $264.8 million, topping the $0.40 on sales of $253.8 million expected from the market analysts.

ENPH expects revenue for the current quarter in a range of $280 million to $300 million, which is comfortably higher than Steet’s expectations of $254.8 million.

“Strong demand for our microinverter systems across all regions continued in the fourth quarter of 2020, while shipments of our newly ramped Enphase Storage systems increased approximately 35% compared to the third quarter. We achieved record microinverter system sell-through from distributors to installers in the fourth quarter of 2020, resulting in lower than usual channel inventory as we exited the quarter,” said President and CEO, Badri Kothandaraman.

A “solid beat and raise” from ENPH pushed Needham analyst James Richiutti to reiterate a “Buy” rating and raise the price target by over 100% to $240.00 per share from the old $118.00.

“ENPH delivered a solid beat-and-raise Q4, driven by the continued recovery in its microinverter business from the pandemic lows in mid-2020 and incremental revenues from its ramping solar storage business. Margins were better than xpected, as ENPH continues to operate at levels above its baseline financial model. Q1 revenue and gross margin guidance was better than expected, though recent acquisitions and stepped-up investments in the business will result in higher op-ex,” the analyst wrote in today's note.

“We believe these investments will enhance ENPH's earnings power in the next several years. We are raising our EPS estimate for 2021 and introduce our 2022 forecast, which assumes continued strong growth in revenues and earnings. We reiterate our Buy rating given the strong fundamentals that we see driving increased adoption of solar power over the next several years.

ROTH Capital analyst Philip Shen says the ENPH business is ramping well, paving the way for higher Q1 and 2021 estimates. The price target on the Buy-rated ENPH stock is also lifted to $260.00 per share from the prior $200.00.

“Heading into the quarter, we were looking for volume and margin strength — we got both. With the backdrop of another ITC extension (5-years at 30% including a storage ITC), we see business ramping well. Near-term, we expect management to work through ASIC/AC FET driver constraints and mitigate the friction of commissioning/installing/managing storage. Look for the stock to be up and to continue to work post-results,” Shen said in a research note.

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