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Enphase Energy and Shoals Technologies Downgraded on Fair Value

Stock Markets Sep 09, 2022 13:04
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By Sam Boughedda

Energy firms Enphase Energy (NASDAQ:ENPH) and Shoals Technologies Group Inc (NASDAQ:SHLS) were downgraded to Neutral from Buy at Guggenheim on Friday.

An analyst also removed the firm's price targets for the stocks.

In a note to investors focused on Enphase, he said they believe the stock is now fairly valued and that upside to their estimates is unlikely.

"We are downgrading ENPH from Buy to Neutral following the stock's 55% appreciation during the last three months, as compared to a decline of 3% for the S&P500 over the same time period," wrote the analyst. "ENPH is one of the bestmanaged and quickly growing companies that we cover, and our updated stance does not reflect a negative assessment of the quality of ENPH's business. That said, we see a company that appears fairly valued even considering the company's growth prospects, and we also see a company that is less likely to deliver upside relative to our expectations, especially at the current gross margin level."

In a separate note on Shoals, the analyst said the company is also fairly valued.

"We are downgrading our investment rating for SHLS from Buy to Neutral, following the stock's 48% appreciation during the last 90 days as compared to a 3% decline for the S&P500 during the same time period," he explained. "The company's ~40% gross margin is unlikely to improve in our opinion, although it's true that operating and EBITDA margins should continue to improve as revenue grows and operating costs are absorbed. Those expectations are however reflected in our model, and based on our outlook, SHLS now appears fairly valued."

Enphase Energy and Shoals Technologies Downgraded on Fair Value
 

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