By Sam Boughedda
Piper Sandler upgraded Enphase Energy (NASDAQ:ENPH) to Overweight from Neutral, assigning the stock a $255 price target in a note Monday.
Analysts told investors that international momentum has been better than expected, while U.S. concerns are not as bad as feared.
"Our prior January downgrade was driven by concerns surrounding U.S. resi based on indicators at the time," explained the analysts. "Disclosures from the publics and discussions with privates indicate that Q1 originations/sales were more favorable than we feared, thereby suggesting the U.S. is more likely to decelerate than decline during '23."
The analysts added that decelerating U.S. concerns coupled with "significantly more international momentum" than they anticipated earlier this year may drive ~40% top-line growth in 2023.
"Given the rising IQ8 mix, easing supply-chains, and manufacturing credits, we expect ENPH's EBITDA margins to approach mid-30s in '23 and 40%+ in '24 (31% in '22)," the analysts stated. "Accordingly, we see potential for meaningful upward earnings revisions during '23/'24 on margins despite inline revenues vs. consensus. We view Q1 earnings as a critical update capable of validating our view that ENPH can deliver attractive earnings growth within the current environment."