The acceleration in the adoption of solar energy in recent years can be attributed to global efforts to reduce greenhouse gas emissions and limit the effects of climate change. In 2012, the International Energy Agency (IEA) predicted that global solar power production would reach 550 terawatt hours by 2030. target exceeded in 2018.
In December, the United States approved two large-scale solar projects in California and the the opening of public lands in other Western states for further development of solar energy. The approvals mark a milestone in the Biden administration’s efforts to limit climate change and meet sustainability goals.
The global solar electricity market is expected to reach $ 57.25 billion in 2022, compared to $ 46.79 billion in 2021, which represents a 22.4% CAGR. Given the industry’s growth outlook, Wall Street analysts expect solar stocks Enphase Energy, Inc. (ENPH), SolarEdge Technologies, Inc. (SEDG) and Sunrun Inc. (RUN) to rebound this year. .
Enphase Energy, Inc. (ENPH)
ENPH in Petaluma, California, designs, develops, manufactures and sells home energy solutions for the photovoltaic industry. The company’s offerings include semiconductor-based microinverters that convert energy at the level of individual solar module and AC battery storage systems.
On January 3, ENPH announced that it had completed the acquisition from electric vehicle (EV) recharging manufacturer ClipperCreek. The acquisition is expected to launch ENPH in the electric vehicle business and accelerate its adoption of two-way charging capabilities, among other benefits. Previously (December 21), ENPH announced the acquisition of the 365 Pronto, Inc. predictive software platform, which is expected to expand its digital platform.
And on December 27, the company declared production shipments of IQ8 microinverters for its North American customers. This is expected to increase business profits by providing custom configurations for customers’ flexible solar power needs.
For its fiscal third quarter, ended September 30, ENPH’s net revenue increased 96.9% year-over-year to $ 351.52 million. Its non-GAAP operating income increased 96.8% from the prior year quarter to $ 85.93 million. Its non-GAAP net income and non-GAAP net earnings per share improved 101.5% and 100%, respectively, to $ 84.16 million and $ 0.60.
The consensus EPS estimate of $ 0.62 for the fourth quarter of 2021 indicates a 21.6% year-over-year increase. And the $ 396.49 million consensus estimate of revenue for the same quarter reflects a 49.7% improvement over the prior year quarter. In addition, ENPH has an impressive history of surprise earnings; it has exceeded consensus EPS estimates in each of the past four quarters.
Over the past year, ENPH stock has gained 3.5% going to close yesterday’s trading session at $ 178.28. It has gained 22.9% in the past three months.
Of the 16 Wall Street analysts rating ENPH, 14 rated it Buy, while two rated it Hold. The 12-month median price target of $ 266.13 indicates a 49.3% upside potential. Price targets range from a low of $ 180.00 to a high of $ 313.00.
SolarEdge Technologies, Inc. (SEDG)
SEDG, based in Herzliya, Israel, is a designer and developer of optimized direct current (DC) inverter systems for solar PV installations worldwide. The company offers inverters, power optimizers and communication devices.
On October 20, SEDG announced the commercial availability of its SolarEdge Energy Bank residential batteries in North American markets. The company also declared the availability of its new SolarEdge Energy Hub inverter. This company is expected to enhance SEDG’s product portfolio.
SEDG’s revenue increased 55.7% year-over-year to $ 526.40 million in its fiscal third quarter ended September 30. Its non-GAAP operating income improved 90.3% from the same period last year to $ 95.24 million. Its non-GAAP net income and non-GAAP EPS were $ 82.11 million and $ 1.45, respectively, up 24.6% and 19.8% from the previous year quarter .
Analysts expect SEDG’s EPS to rise 38.8% year-on-year to $ 1.36 for its fiscal fourth quarter 2021. And Street expects its revenue to hit 552, $ 69 million in the same quarter, indicating a 54.3% increase over the same period. Last year. Additionally, SEDG has beaten consensus EPS estimates in three of the past four quarters.
The stock has gained 7% in the past three months to close yesterday’s trading session at $ 273.10.
Of the 19 Wall Street analysts who rated SEDG, 14 rated it Buy, four rated it Hold, and one rated it Sell. The 12-month median price target of $ 377.59 indicates a 38.3% upside potential. Price targets range from a low of $ 300.00 to a high of $ 441.00.
Sunrun Inc. (CLASSES)
RUN designs, develops, installs and sells residential solar energy systems in the United States. The San Francisco-based company provides solar energy systems and products, such as panels and shelving, and offers battery storage.
On October 29, RUN announced the extension of its program with SPAN, a developer of electrical panels. The program is expected to improve RUN’s customer experience and reduce installation costs and complexities by leveraging SPAN’s home electrical panel with an intuitive application interface.
On October 11, RUN announced an increase in its non-recourse warehouse loan facility to $ 1.8 billion in commitments and a reduction in interest charges. Commenting on this, Tom von Reichbauer, CFO of Sunrun, said: “We are delighted to expand our warehouse to support continued growth while reducing the cost of financing. “
For its fiscal third quarter, ended September 30, RUN’s total revenue increased 109.2% year-over-year to $ 438.77 million. Its net cash provided by financing activities increased 93.5% from the prior year quarter to $ 704.50 million. The company’s cash and restricted cash balance amounted to $ 941.12 million, up 146.7% from the same period last year.
Street’s EPS estimate of $ 0.03 for the last quarter of 2021 shows a 104% year-over-year increase. And its estimated revenue of $ 408.92 million for the fourth quarter of 2021 reflects a 27.6 percent improvement over the previous year’s quarter.
RUN shares gained 1.7% in the past five days to close yesterday’s trading session at $ 34.57.
Of the nine analysts rating RUN, five rated it Buy, two rated it Hold, and two rated it Sell. The 12-month median price target of $ 61.64 indicates a 78.3% upside potential. Price targets range from a low of $ 20.00 to a high of $ 91.00.
ENPH stock fell $ 3.28 (-1.84%) in pre-market on Wednesday. Year-to-date, the ENPH has fallen -4.50%, compared to a 0.49% increase in the benchmark S&P 500 over the same period.
About the Author: Anushka Dutta
Anushka is an analyst whose interest in understanding the impact of broader economic changes on financial markets motivated her to pursue a career in investment research. Following…