Selloff in solar energy company’s stock has created ‘more digestible’ and ‘attractive’ entry point for long-term investors, B. Riley says
Shares of Enphase Energy Inc. jumped Friday, after B. Riley analyst Christopher Souther provided a bullish jolt by saying the selloff this year has provided an “attractive” level to buy for new long-term investors.
Souther raised his rating on the maker of solar energy equipment, including electric-vehicle (EV) chargers and solar panel microinverters, to buy from neutral. His new price target on the stock ENPH, +5.49% of $214 implied about 35% upside from Thursday’s closing price of $158.77.
The stock rallied 1.6% in morning trading. Through Thursday’s close, the stock had gained 3.9% since closing at a 13-month low of $152.88 on May 2, but had tumbled 52.7% since it closed at a record $336.00 on Dec. 2, 2022. In comparison, the S&P 500 index SPX, +1.23% has gained 8,0% over the same time.
Souther said what had kept him neutral on Enphase’s stock was excessive valuation relative to its peers, but that valuation gap has essentially closed.
The stock has lost more than half its value from its highs, “bringing valuation to a more digestible level and providing an attractive entry point for long-term investors, in our view,” Souther wrote in a note to clients.
While concerns about growth in the U.S. residential market in the second half of 2023 and into 2024 remains a “key” risk, Souther said he believes “the company’s continued runway for growth in European markets gives confidence that our estimates for more modest growth are achievable.”
Along with his upgrade of Enphase, Souther also downgraded Eos Energy Enterprises Inc. EOSE, -11.97% to neutral from buy, sending the stock down 8.2% ahead of the open.