Enphase Energy stock price: Buyers beware if this happens
Enphase Energy (NASDAQ: ENPH) stock price has been in a strong freefall this year as demand for the stock evaporated. The shares peaked at $340 in December 2022 and have now plunged to $120, the lowest level since February 2022. Its market cap has crashed to over $16 billion.
Slow growth in the solar industryCopy link to section
The developed world is going through a transition energy as most countries work to reduce their carbon emissions. Solar and wind have emerged as key parts of this transition.
Recently, however, there are signs that this process is having challenges. The UK’s government auction for offshore wind failed to attract any bids. And in the US, several governors warned that wind projects were poised to fail without federal government support.
Enphase Energy and other companies in the solar industry are also seeing slow growth as costs rise. The most recent results showed that Enphase Energy’s revenue jumped to $711 million in Q2, missing analysts’ expectations.
The company’s net income came in at $157.2 million, higher than the $146 million it reported in Q1. At the same time, Enphase Energy initiated a new $1 billion share buyback program, as I wrote here.
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Enphase stock price has plunged because of the company’s weak guidance. It expects its revenue will be between $550 million and $600 million. Analysts were expecting better performance for the quarter.
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The stock decline has led some investors to consider the company, thanks to its attractive valuation. For example, the CEO recently bought shares worth over $4 million. Insider purchase is one of the best indicators.
Enphase Energy has more benefits. It has a strong market share in the US, has recently expanded in Australia, and is in an industry that is expected to grow by double digits in the next few years. Studies expect the solar industry will grow by 30% by 2030.
Most importantly, Enphase valuation is reasonable. It has a PE ratio of 24, which is lower than its historical average. It is also a good metric for a company that is growing by more than 30%.
Enphase Energy stock price forecastCopy link to section
The weekly chart shows that the ENPH stock price has been in a strong bearish trend in the past few months. Recently, it moved below the important support level at $129.15, the lowest swing in May 2022.
Enphase shares have dropped below the 50-week and 200-week moving averages. The two will likely have a bearish crossover soon. Most importantly, Enphse Energy stock price is nearing the key support at $112.92, the lowest swings since May 2021.
Therefore, a drop below this support will point to more downside in the coming months. This decline will likely see it plunge to the next key support at $100.