Enphase Energy downgraded at Piper Sandler on weakening demand

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Enphase Energy (NASDAQ:ENPH) was downgraded to Neutral from Overweight, with its price target cut to $255 from $350 by Piper Sandler on Wednesday due to the weakening US residential solar environment.

Piper Sandler analysts told investors in a note that last Friday, after the close, KBRA published its preliminary rating on GoodLeap’s new ABS, including a chart indicating a sharp decline in December 2022 loan originations vs. the Aug ’22 peak.

In addition, the analysts said that solar originations in December 2022 appear over 10% below December 21.

“Given GoodLeap’s market position (~30% share), we believe other loan sellers may be experiencing similar trends,” wrote the analysts. “While we expected a deceleration in Cal’23 US resi growth partially due to higher financing costs adversely impacting regions with marginal economics, we did not anticipate this degree of demand weakness.”

“With most of the US resi market potentially undergoing an activity reset during Cal’23, we are downgrading ENPH to Neutral from OW. We still view ENPH as a company with solid products, strong mgmt, best-in-class ops, and an attractive market position; however, we believe US resi demand uncertainty is too elevated,” the analysts conclude.

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