Enphase Energy Stock Slides After RBC Downgrade, But Retail Shrugs It Off

Enphase Energy, Inc. ($ENPH) shares dropped over 9% on Tuesday following a downgrade from RBC Capital, but retail investors seem unshaken by the bearish analyst note.

RBC’s Christopher Dendrinos lowered his rating from ‘Outperform’ to ‘Sector Perform,’ with a reduced price target of $100, down from $125.

Dendrinos pointed to competitive market pressures and projected slower growth for Enphase next year, estimating 2025 revenue at $1.825 billion — 8% below consensus — and 2026 revenue at $2.05 billion, 13% below consensus.

The analyst cited increased competition from “third-party ownership systems” benefiting from higher Inflation Reduction Act tax credits as potential demand headwinds.

Dendrinos estimates that 6% of Enphase Energy’s inverter installations in California are part of projects using Tesla Inc.’s ($TSLA) Powerwall 2 batteries. If Tesla successfully transitions customers to its newer Powerwall 3, the analyst estimates that Enphase Energy could lose this inverter market share. While this trend is mostly concentrated in California, it represents an incremental headwind for Enphase.

Despite the downgrade, retail sentiment on Stocktwits remained ‘extremely bullish’ (80/100).

One user noted that the solar field is slowly recovering in Europe, while another expressed optimism for a post-earnings rally, dismissing analyst downgrades as routine.

Trading volume on Tuesday was nearly double the daily average of 2.4 million shares.

Enphase recently launched its most powerful home battery, the IQ Battery 5P, in the Netherlands and introduced new energy management software to support dynamic electricity rates and third-party EV chargers and heat pumps.

However, its Q2 performance has raised concerns, with both EPS and revenue falling short of expectations.

Looking ahead to Enphase’s Q3 earnings report next week, analysts expect EPS to drop to $0.79 from $1.02 year-over-year, with revenue projected between $370 million and $410 million.

While the solar industry faces challenges from higher interest rates, BMO Capital on Monday urged caution regarding investments in the Energy Transition sector, citing policy uncertainties ahead of potential political shifts in the U.S. prior to the November presidential election.

BMO also trimmed its price target on Enphase to $104 from $114, maintaining a ‘Market Perform’ rating, and raised concerns about limited residential solar demand, a critical driver of Enphase’s top-line growth.

So far this year, ENPH’s stock has lost nearly 30% of its value.

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