TLDR:
- RBC Capital Markets downgraded Enphase Energy to Sector Perform from Outperform
- Price target lowered to $100 from $125 due to competitive pressures
- Analyst predicts slower growth in 2025 and 2026 compared to consensus estimates
- Potential market share loss in California due to Tesla’s Powerwall 3
- Battery demand growth may slow down after strong performance year-to-date
Enphase Energy, a leading manufacturer of solar micro-inverters and energy storage systems, is facing new challenges according to recent analyst reports.
On Tuesday, October 15, 2024, RBC Capital Markets analyst Christopher Dendrinos downgraded Enphase Energy from Outperform to Sector Perform and lowered the price target from $125 to $100. This news caused a significant drop in Enphase’s stock price, with shares trading lower by 8.79% at $92.55.

The downgrade comes as a result of several factors that could impact Enphase’s growth prospects. Dendrinos cited competitive market dynamics as a primary concern, suggesting that the company may experience a slower growth rate in the coming year than current consensus estimates predict.
The analyst’s models for Enphase’s revenue are notably below consensus, with projections of $1.825 billion for 2025 (8% below consensus) and $2.05 billion for 2026 (13% below consensus).
One of the key issues highlighted in the report is the potential loss of market share in California, a crucial market for Enphase. The analyst estimates that about 6% of Enphase’s inverter installations in California are part of projects using Tesla’s Powerwall 2 batteries.
If Tesla successfully transitions customers to its new Powerwall 3, Enphase could lose this portion of the inverter market share. While this trend is primarily observed in California, it represents an additional challenge for the company.
Battery demand has exceeded expectations year-to-date, with ongoing growth anticipated next year due to the adoption of NEM 3 (Net Energy Metering 3.0) policies.
However, the analyst cautioned that growth from current levels might start to slow down. Enphase has successfully captured market share in California with its IQ Battery 5P, but maintaining this momentum could become more difficult.
The high interest rate environment and the ability of third-party ownership (TPO) systems to access higher Inflation Reduction Act tax credits are factors that support continued TPO adoption. This trend could potentially become an increasing headwind to demand growth for Enphase in the coming year.
Dendrinos also noted that Enphase might be losing share in backup power markets. However, he acknowledged an opportunity for the company to regain market share with the launch of its next-generation 10kW battery, meter collar, and new combiner in early 2025. These products are expected to drive significant cost savings, which could help Enphase compete more effectively.
The downgrade has sparked a broader discussion about the solar energy sector and its near-term prospects. With Enphase being a major player in the industry, the company’s challenges may reflect wider market trends and competitive pressures affecting solar technology providers.
Despite the recent downgrade, analyst sentiment on Enphase had been generally positive. Prior to this report, 20 out of 36 analysts covering the stock rated it as a “buy” or better.
This suggests that there may be room for further adjustments in analyst recommendations if the concerns raised by RBC Capital Markets prove to be well-founded.
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