Amid a modestly positive Monday afternoon, solar technology specialist Enphase Energy (NASDAQ:ENPH) enlivened the mood considerably, gaining more than 5%. An encouraging on-the-field report about growing demand for its solar energy systems bolstered sentiment for ENPH stock. As well, an analyst upgrade combined with broader political support generated considerable enthusiasm.
According to the company’s press release earlier this morning, installers of Enphase products in Pennsylvania reported growing deployments of the firm’s energy systems. Citing the U.S. Solar Market Insight report from Wood Mackenzie and the Solar Energy Industries Association, analysts project residential solar deployments in Pennsylvania may reach 77 megawatt (MW) capacity in 2023.
If so, this tally would represent a 10% increase from the prior year. Naturally, the prospect bodes incredibly well for ENPH stock. Specifically, Blake Reedy, owner of Pennsylvania Solar Energy Company, stated the following:
“We’re seeing increased demand from homeowners in Pennsylvania who want a dependable home energy system that will ease the strain of rising energy costs, while also providing utility independence in times of an overtaxed and aging utility infrastructure.”
Further, Reedy stated the Enphase Energy System “fits the bill in terms of quality, reliability, and performance.” Notably, the system can also integrate with a battery backup, thus helping mitigate increasing power outages across the nation.
ENPH Stock Gets an Analyst Upgrade
In response to the upbeat projections for residential solar panel installations, Janney Montgomery Scott positively reassessed its position on ENPH stock. Specifically, analyst Sean Milligan upgraded Enphase shares to “buy” from “neutral.” As well, he estimates the security’s fair value stands at $282. At time of writing, ENPH trades hands at $211.48, implying more than 33% upside potential.
Enticingly, that’s toward the lower end of analyst projections. Although Milligan acknowledged demand for solar panels raised some concerns, “recent commentary from publicly-traded residential installers has been bullish.”
In addition, ENPH stock fundamentally benefits from political catalysts. According to Barron’s, “Factories are suddenly cranking out everything from solar and wind equipment to batteries and low-carbon fuel. Corporate investment dollars, spurred by new tax breaks, are transforming the U.S. from an also-ran in alternative energy to a real player, lifting the fortunes of a number of companies.”
The increased activity centers on President Joe Biden’s earmarking of $370 billion for clean-energy initiatives under the Inflation Reduction Act. Per Credit Suisse, since the bill’s passage, various enterprises announced 76 clean-energy projects. Among this tally, 40 projects specified dollar amounts, which totaled $77 billion.
“We’re basically accelerating the energy transition at ludicrous speed,” says Michael Cerasoli, portfolio manager at Eagle Global Advisors. To be fair, economic woes – particularly with the Federal Reserve poised to raise interest rates to combat stubborn inflation – present sector challenges.
Also, California’s limitation on repayments regarding residential solar panels dampens much of the enthusiasm. Still, on balance, the market appears buoyed with ENPH stock, bidding it higher.
Why It Matters
According to TipRanks, ENPH stock enjoys a consensus “moderate buy” view among Wall Street analysts. This assessment breaks down to 14 buys, five holds and no sell ratings. Moreover, their average price target stands at $303.94, implying nearly 44% upside potential.
At the lowest end of the spectrum, a $250 price target potentially awaits conservative investors. On the highest end, one analyst targets a $365 price point.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
