Enphase Energy (ENPH) stock gains on 'strong beat' but analyst warns of a slowdown

Enphase Energy (NASDAQ: ENPH) delivered another strong earnings report and guidance to send its shares about 8% higher in pre-market Wednesday.

Enphase posted a Q4 EPS of $1.51 on revenue of $724.7 million, easily beating the analyst consensus for earnings of $1.28 on revenue of $706.28M. Adjusted gross margin came in at 43.8%, 200 points ahead of the consensus.

“We are adding additional manufacturing capacity in the United States due to the strong global demand for our products as well as the incentives related to the Inflation Reduction Act (IRA). We plan to begin domestic manufacturing in the second quarter of 2023 with a new contract manufacturing partner and in the second half of 2023 with our two existing contract manufacturing partners,” the company said in a press release.

For this quarter, ENPH expects revenue in the range of $700-740M, again easily topping the consensus of $690.45M.

Barclays analyst Christine Cho said Enphase Energy delivered “solid” results, although she warns that some signs of slowing are emerging.

“While ENPH ended 2022 on a high note, we do expect microinverter shipments to slow as installers remain cautious in a tougher macro tape with inventory channels already at healthy levels,” Cho wrote in a note.

Goldman Sachs analyst Brian Lee is more positive as he writes that Enphase managed to alleviate near-term investor concerns with yesterday’s earnings report.

“While bears had been expecting a more cautious outlook (and/or tone), ENPH delivered on a solid outlook as well with 1Q23 guidance coming in well above expectations, though some bears may point to the fact that ENPH guided 1Q revenue flat/down off the big 4Q beat for the first time in several years. On the upside, ENPH guided to US manufacturing to commence by 2Q23, ahead of expectations. We remain Buy rated,” Lee said in a client note.

By Senad Karaahmetovic

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