Increased attention to climate change has led countries around the world to focus on sustainable energy development. The United States is aiming for carbon neutrality by 2050. The US Energy Information Administration reported that solar power is expected to account for about half of new power generation capacity in the United States. New utility-scale solar power is expected to reach 46 gigawatts in the United States in 2022.
According to the Global Market Report 2022the solar electricity market is expected to reach $125.57 billion in 2026, growing at a CAGR of 21.7%. Increasing government investments and rapid advancements in technology including research and development of solar panels are the major drivers for the growth of the solar energy market.
Given these factors, Wall Street analysts expect solar stocks Enphase Energy, Inc (ENPH), SolarEdge Technologies, Inc. (SEDG) and Sunrun Inc. (CLASSES) to rally in the short term.
Enphase Energy, Inc. (ENPH)
ENPH is an American energy technology company that designs, develops, manufactures and sells energy solutions internationally for the solar photovoltaic industry. the Petaluma, California, relate to offers solar and AC battery storage systems based on microinverters and sells its solutions to solar distributors, strategic partners, equipment manufacturers and homeowners.
Last month, ENPH expanded its battery storage facilities in Massachusetts, Pennsylvania, Washington, Illinois, Colorado and New York. Expanding ENPH’s Battery IQ into these states could attract new customer base, increase ENPH’s influence in the market, and increase its revenue streams. Earlier this month, the company also expanded its battery storage to Arizona for individual families and for the entire grid.
Last month, ENPH partnered with Semper Solaris, a leading solar and home battery contractor, to deploy Enphase Energy systems powered by IQ microinverters and IQ batteries across the state. These battery installations of ENPH are expected to increase its customer base and profits for the company.
During its third quarter of fiscal 2021, which ended September 30, ENPH’s revenue increased 96.9% year-over-year to $351.52 million. Its operating profit rose 96.8% year-over-year to $85.93 million. Its net income rose 101.5% from its value a year ago to $84.16 million. Of the society earnings per share rose 100% from its value a year ago at $0.30.
Consensus revenue estimate of $399.62 million for its fiscal fourth quarter, ending December 31, 2021, represents 50.9% year-over-year growth over the same period in 2020 The consensus EPS estimate of $0.59 for the quarter to report indicates 16.4% growth year over year compared to the same period last year. The company has an impressive track record of earnings surprises; it has exceeded consensus EPS estimates in each of the past four quarters.
Over the past year, the stock price has fallen 32.3% to close yesterday’s trading session at $132.91. However, ENPH’s 12-month median price target of $242.59 indicates a 82.5% upside potential. Price targets range from a low of $158.00 to a high of $313.00. Of 17 Wall Street analysts who rated ENPH, 15 rated it Buy, while two rated it Hold.
SolarEdge Technologies, Inc. (SEDG)
SEDG designs, develops, operates and sells inverter systems optimized for solar photovoltaic (PV) installations worldwide. SEDG is headquartered in Herzliya, Israel. The Company’s product portfolio includes SolarEdge Inverter, SolarEdge Power Optimizer, SolarEdge Solutions and SolarEdge Monitoring Software.
Last October, SEDG announced the availability of a new SolarEdge Energy Bank battery and new SolarEdge Energy Hub inverters in North America. This complete SolarEdge residential solution enables homeowners to efficiently manage solar energy generation, consumption and storage. Through this product expansion, SEDG is expected to expand its customer base and increase revenue worldwide.
During its third quarter of fiscal 2021, which ended September 30, SEDG’s revenue increased 55.7% year-over-year to $526.40 million. Its gross profit rose 58.2% year-over-year to $179.08 million. The company’s operating profit rose 90.3% from the same period last year to $95.24 million. And its net profit rose 24.6% from the previous year’s value to $82.11 million. The company’s net earnings per share rose 19.8% from its value a year earlier at $1.45.
Analysts expect SEDG’s revenue for its fiscal fourth quarter, ending December 2021, to be $551.03 million, a 53.9% year-over-year increase. The Street expects the company’s fourth-quarter EPS to be $1.33, representing a 35.3% year-over-year increase. Additionally, SEDG has an impressive history of earnings surprises; it has exceeded consensus EPS estimates in three of the last four quarters.
SEDG shares have fallen 24.7% over the past year. However, based on 14 Wall Street analysts who rated SEDG, nine rated it Buy, while five rated it Hold. The $334.57 12-month median price target indicates a 44.7% upside potential from yesterday’s closing price of $231.20. Price targets range from a low of $270.00 to a high of $441.00.
Sunrun Inc. (CLASSES)
Based in San Francisco RUN is a solar battery storage and energy services company. It designs, develops, operates and sells residential solar energy systems, such as panels and shelving. It also provides battery and solar energy storage systems to its customers and sells its services to commercial developers through its multifamily and residential offerings.
Last month, RUN replaced its $250 million resource loan facility with a larger $425 million facility on improved terms and with a longer tenor. The new $425 million loan facility will mature in January 2025. The new loan facility is expected to expand its borrowing base to support more efficient inventory financing and continued business growth.
Last December, RUN celebrated the completion of a new solar installation with BRIDGE housing that serves 94 rental units in Suisun City, California. This should increase tenant engagement and increase RUN’s revenue streams.
During its third quarter of fiscal 2021, which ended September 30, RUN’s total revenue increased 109.2% year-over-year to $438.77 million. The company’s cash increased 38% in the nine months ended September 30, 2021, to $717.59 million. RUN’s total assets increased by 11.9% during the nine-month period to $16.09 billion.
The consensus revenue estimate of $410.14 million for its fiscal fourth quarter, ending December 2021, represents a 28% year-over-year increase. RUN has an impressive history of surprising earnings; it has exceeded consensus EPS estimates in three of the last four quarters.
Shares of RUN are down 68.9% over the past year and closed yesterday’s trading session at $23.04. However, Wall Street analysts expect the stock to rebound in the short term. Of the 14 Wall Street analysts who rated RUN, 11 rated it Buy, while two rated it Hold and one rated it Sell. The 12-month median price target of $59.15 indicates upside potential of 156.7%. Price targets range from a low of $20.00 to a high of $91.00.
ENPH shares were trading at $138.00 per share on Friday afternoon, up $5.09 (+3.83%). Year-to-date, the ENPH is down -24.57%, compared to a -5.69% rise in the benchmark S&P 500 over the same period.
About the Author: Mangeet Kaur Bouns
Mangeet’s keen interest in the stock market led her to become an investment researcher and financial journalist. Using its fundamental approach to stock analysis, Mangeet seeks to help retail investors understand the underlying factors before making investment decisions. Following…