What happened
Enphase Energy (ENPH 3.80%) delivered mixed second-quarter results after the market closed Thursday, beating expectations on the top line but coming up short on the bottom line. Management's lackluster guidance for the third quarter, as well as a tide of bearish sentiment from analysts, are also pressuring the renewable energy stock Friday.
As of 11:56 a.m. ET, shares of Enphase were down by 9.6%.
So what
Reporting $711.1 million on the top of the income statement for Q2, Enphase failed to meet analysts' consensus revenue estimate of $722.1 million. What investors found even more disheartening, though, is what the company foresees for the third quarter. Management projects Q3 revenue in the $550 million to $600 million range -- notably lower than the $748.1 million that analysts expect.
The company's new capital allocation strategy represents another likely source of consternation for investors. Enphase announced that its board of directors has approved $1 billion in stock buybacks. The company bought back $200 million in company stock last quarter, and investors might prefer the company to return capital via dividends instead of continuing to repurchase stock.
In the wake of the report, analysts came out in droves to express their pessimism. Here are a few of those analysts' actions:
- Barclays slashed its price target on Enphase shares to $155 from $221.
- JP Morgan reduced its price target to $199 from $224.
- Roth MKM cut its price target to $185 from $250.
Now what
While Enphase reported provided less-than-thrilling Q2 results and a gloomy Q3 forecast, investors would be short-sighted to completely dismiss this solar power and energy storage leader. After Friday morning's sell-off, those with long-term investing horizons can pick up shares at a significantly lower price than they've been trading at for the past year.
