3 solar stocks Wall Street expects to rebound in the year ahead

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The solar industry is growing rapidly due to the global drive to curb climate change. For example, the Biden administration decided to establish solar projects in western states to move away from fossil fuels. Given the bright outlook for the industry, Wall Street analysts expect shares of Enphase (ENPH), SolarEdge (SEDG) and Sunrun (RUN) to rebound in 2022. So read on to watch closer to these names.

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The accelerating 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 generation would reach 550 terawatt hours by 2030. However, this target exceeded in 2018.

In December, the United States approved two large-scale solar projects in California and opening of public lands in other western states for further development of solar energy. The approvals represent a step in the Biden administration’s efforts to limit climate change and meet sustainability goals.

The global solar electricity market is expected to grow from $46.79 billion in 2021 to $57.25 billion in 2022, 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. (CLASSES) 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 power at the individual solar module level and AC battery storage systems.

On January 3, the ENPH announced that it had completed the acquisition from electric vehicle (EV) charging maker ClipperCreek. The acquisition is expected to launch ENPH into the electric vehicle sector and accelerate its adoption of two-way charging capabilities, among other benefits. Earlier (December 21), ENPH announced the acquisition of predictive software platform 365 Pronto, Inc., which is expected to expand its digital platform.

And on December 27, the company declared production shipments of the IQ8 microinverters for its North American customers. This should add to the company’s profits by providing custom configurations for customers’ flexible solar power needs.

For its third fiscal quarter, ended Sept. 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 year-ago 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 consensus revenue estimate of $396.49 million for the same quarter reflects a 49.7% improvement over the prior year quarter. Furthermore, ENPH has an impressive track record of surprise gains; it has exceeded consensus EPS estimates in each of the past four quarters.

Over the past year, ENPH stock has gained 3.5% in price to close yesterday’s trading session at $178.28. It has gained 22.9% over the past three months.

Of the 16 Wall Street analysts who rate ENPH, 14 rated it Buy, while two rated it Hold. The $266.13 12-month median price target 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 direct current (DC) optimized 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 home batteries in North American markets. The company also declared the availability of its new SolarEdge Energy Hub inverter. This company should enrich SEDG’s product portfolio.

SEDG’s revenue rose 55.7% year-on-year to $526.40 million in its fiscal third quarter, which ended Sept. 30. Its non-GAAP operating profit 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 year-to-date quarter. former.

Analysts expect SEDG’s EPS to rise 38.8% year-over-year to $1.36 for its fourth fiscal quarter of 2021. And Street expects its revenue reached $552.69 million in the same quarter, indicating an increase of 54.3% over the same period. Last year. Additionally, SEDG has exceeded consensus EPS estimates in three of the past four quarters.

The stock has gained 7% in price over 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 Upside potential of 38.3%. 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 power systems in the United States. The San Francisco company provides solar energy systems and products, such as panels and shelving, and offers battery storage.

On October 29, RUN announced the expansion 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 app 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 excited to expand our warehouse to support continued growth while lowering the cost of financing.

For its third fiscal quarter, which ended September 30, RUN’s total revenue increased 109.2% year-on-year to $438.77 million. Its net cash from financing activities soared 93.5% from the year-ago quarter to $704.50 million. The company’s cash and restricted cash balance was $941.12 million, up 146.7% from the same period last year.

The Street’s EPS estimate of $0.03 for the last quarter of 2021 indicates a 104% year-over-year increase. And its revenue estimate of $408.92 million for the fourth quarter of 2021 reflects a 27.6% improvement over the year-ago quarter.

Shares of RUN have gained 1.7% over the past five days to close yesterday’s trading session at $34.57.

Of the nine analysts who rate 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 shares fell $3.28 (-1.84%) in premarket trading on Wednesday. Year-to-date, the ENPH is down -4.50%, compared to a 0.49% rise 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.

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