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Enphase Energy (NASDAQ:ENPH) -6.1% in Thursday’s trading as Scotiabank downgraded the solar stock to Sector Perform from Sector Outperform with a $140 price target, cut from $180, saying it has lost st conviction that the destocking cycle in Q3 marks the all-clear for the inventory channel, pricing risks and overall demand.
Enphase (ENPH) has bounced 10% off recent lows, and while the shares are not expensive, “it is difficult to see a path to marked and sustained improvement in the macro environment over the next 2-3 quarters,” Scotiabank’s Tristan Richardson wrote.
In an uncertain demand environment and with price pressure on much of the value chain within residential solar, Richardson said he sees risks to Enphase’s (ENPH) near-term margin profile.
BMO Capital also downgraded Enphase (ENPH) earlier this week for similar reasons.
Richardson also cut his price target for SolarEdge Technologies (NASDAQ:SEDG) to $170 from $345 while maintaining his Sector Perform rating, as that while the company has enjoyed growth in Europe over the past several years, the destocking cycle seems similar to the U.S. though lagging by a quarter or two; shares -5.4%.
The analyst’s top picks in clean tech are utility-scale names Array technologies (ARRY) and Nextracker (NXT), while residential installers Sunnova (NOVA) and Sunrun (RUN) are notable value plays that are oversold in the current rate-related selloff.
