Enphase Energy (NASDAQ: ENPH ) Inc., a manufacturer of solar energy equipment, has been upgraded from hold to buy by Seaport Research analyst Tom Curran, as reported on Thursday. Curran has set a price target of $185 for Enphase's stock, indicating a 49% potential increase from its Wednesday closing price of $123.97. The shares haven't reached this target since July 19.
Curran's optimistic outlook is fueled by Enphase's ongoing share buybacks and strong performance in Europe. The company spent $200 million on share repurchases in the second quarter of this year, completing a $500 million buyback initiative established a year ago. Following this, Enphase initiated another buyback program worth $1 billion.
Despite a minor 0.6% dip in premarket trading, Enphase's stock had seen a 5.8% increase over two previous sessions, following a two-year low of $117.16 on Monday.
The company experienced a decrease in U.S. revenue by 12% in the second quarter, following a 9% decrease in the first quarter. However, it saw its European revenue surge by 25% in both quarters. According to Curran, this growth can be attributed to the firm's established presence in France and the Benelux region (Belgium, Netherlands, and Luxembourg) and significant market share in Germany.
In addition to its European success, Enphase recently announced the launch of its Enphase Energy System in the United Kingdom, promoting it as its most powerful system yet.
Curran also anticipates a recovery in U.S. residential solar installations, which he expects to materialize by June next year. This optimism contrasts with the company's recent performance; Enphase's stock has fallen by 53.2% year-to-date through Wednesday.
However, Curran is not alone in his bullish outlook. Out of the 37 analysts covering Enphase surveyed by FactSet, 24 share a bullish stance, 11 maintain a neutral position, and one is bearish. This comes as the iShares Global Clean Energy ETF (NYSE: XLE ) ICLN has fallen by 21.8%, while the S&P 500 index SPX has risen by 14.7%.
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