Please ensure Javascript is enabled for purposes of website accessibility
Free Article Join Over 1 Million Premium Members And Get More In-Depth Stock Guidance and Research

Why Enphase Energy Stock Popped Today

By Rich Smith - Jan 5, 2021 at 11:18AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Goldman Sachs predicts Enphase will earn twice what everyone else thinks it will.

What happened

After a New Year's hiccup on Monday, when it was down 2%, the stock of solar microinverter-maker Enphase Energy ( ENPH -3.58% ) was turning things around this morning, and was up 7.6% at 10:30 a.m. EST.

You can thank Goldman Sachs for that.

Stock up glowing green arrow climbs on a stock screen

Image source: Getty Images.

So what

Late last night, the investment bank announced it is upgrading shares of Enphase Energy from neutral to buy, and drastically revising its price target on the solar stock, nearly doubling it to $232 per share. Goldman argues that Enphase, founded in 2006, is still a "relatively early secular growth story" and has "multi-year, multi-faceted growth potential" as it gains market share for solar inverters.

More than that, Goldman sees growth opportunities in rechargeable batteries, commercial business adoption of its products, and international expansion, according to TheFly.com today.

Now what

Enphase saw its $1.23 earnings per share in 2019 pared to an estimated $0.74 in 2020. But analysts on average predict the company will quickly rebound in 2021, surpassing 2019's EPS to earn $1.32. Indeed, S&P Global Market Intelligence shows the company's EPS rising as high as $3.59 by 2024, but Goldman thinks the company could do even better. In its estimation, there's a path to Enphase earning twice as much as most analysts think possible, with annual EPS of $7.

But the real question for investors is this: Even assuming everything goes right and Enphase earns what Goldman says it will, at $186 a share today, is Enphase worth paying 26.5 times the profit it might earn five years from now?

I have my doubts about that.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Enphase Energy, Inc. Stock Quote
Enphase Energy, Inc.
ENPH
$247.53 (-3.58%) $-9.19

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
673%
 
S&P 500 Returns
142%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 11/30/2021.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Our Most Popular Articles

Premium Investing Services

Invest better with the Motley Fool. Get stock recommendations, portfolio guidance, and more from the Motley Fool's premium services.