Freedom Broker lowered by 22% its target price for Enphase Energy, a mid-cap developer of solar energy solutions. While the company’s third-quarter results significantly beat market expectations, it surprised investors to the downside with its outlook for 2026, which points to a sharp decline in demand.
Details
Freedom set a new $31 price target on shares of Enphase Energy, a maker of microinverters and solar storage devices, while maintaining its "hold" recommendation, according to a note seen by Oninvest.
The new target price is 22% below the previous level and nearly in line with current market quotes. On Friday, October 31, Enphase shares closed at $30.50 per share, meaning there is virtually no upside versus the Freedom target price.
Freedom's rationale
Enphase Energy reported last week that its third-quarter revenue rose 7.7% year over year to $410.4 million, its highest level in two years. The result exceeded both the FactSet consensus forecast of $369 million and Enphase’s own guided range of $330-370 million, Freedom noted.
Growth was driven by the U.S., where quarterly revenue climbed 23.2%. Many consumers rushed to purchase equipment ahead of the planned phaseout of government incentives for solar installations, Freedom’s analysts explained. One provision of the Biden-era Inflation Reduction Act currently allows homeowners to claim a 30% federal tax credit for residential solar installations, but that provision will expire in 2026.
At the same time, Enphase’s sales outside the U.S. fell 37.7%, a decline the company attributed in part to a challenging business environment in Europe.
For the fourth quarter, Enphase expects revenue between $310 million and $350 million, while the consensus forecast stood at $368 million, Freedom pointed out in its report. The company also issued longer-term guidance – unusual for Enphase, which typically provides only quarterly forecasts. The management indicated that first-quarter 2026 revenue could fall about 30% year over year to around $250 million. “The elimination of tax incentives appears likely to result in a strong decline in demand for solar panel installation in the U.S.,” Freedom wrote.
Freedom noted the company views the first quarter as a trough, followed by a gradual recovery. The management cited several potential catalysts, including an expected rise in U.S. electricity prices, lower interest rates, new product launches, and continued growth in the energy storage segment. Based on these projections, Freedom cut its full-year 2026 revenue forecast for Enphase by 12% to $1.24 billion.
What other analysts say
Wall Street remains cautious about the company’s prospects, according to MarketWatch data. Fifteen analysts rate the stock as “hold,” nine "sell," and only seven "buy." The average target price is $36.72 per share, implying upside of 20.3% from current levels.
The AI translation of this story was reviewed by a human editor.
