Enphase Energy (ENPH) Stock Falls After Earnings as Solar Slump Continues

TLDR

• Enphase beat Q1 EPS estimates ($0.47 vs $0.43 expected) but revenue fell 20.6% year over year
• ENPH stock dropped around 11% Wednesday after a weak Q2 outlook
• U.S. sales dropped 23% year over year following changes to federal solar tax credits
• Enphase announced a move into data center equipment, but Wall Street is waiting for actual sales before getting excited
• Wells Fargo cut its price target from $50 to $45, while the consensus rating sits at “Hold” with an average target of $41.20

Enphase Energy reported better-than-expected Q1 earnings on Tuesday, but the numbers underneath the headline weren’t pretty. The stock dropped around 11% on Wednesday as investors focused on falling margins, a weak Q2 forecast, and a core business under real pressure.

Enphase Energy, Inc., ENPH

The company posted EPS of $0.47, beating the $0.43 consensus. Revenue came in at $282.9 million, just above the $282.25 million estimate. But revenue was down 20.6% compared to the same quarter last year, and Q1 2025 EPS had been $0.68 — a sharp drop year over year.

The main culprit is the U.S. residential solar market. Changes to federal tax legislation removed a key incentive for homeowners buying solar systems outright. Before the change, a standard $20,000 installation could save a homeowner $6,000 in federal taxes. That benefit is now gone for direct purchases.

U.S. sales fell 23% year over year as a result. Enphase is pushing a workaround — leasing panels or selling power through a third party, which still qualifies for subsidies. But analysts aren’t convinced it’ll be enough to turn things around quickly.

Europe Offers Some Relief, But Not Enough

But Europe is still a small piece of Enphase’s overall business. The U.S. remains the dominant market, so European growth doesn’t meaningfully offset the domestic decline right now.

Data Center Pivot Gets a Cool Reception

Enphase also announced it’s developing equipment for the data center market — specifically a solid-state transformer platform that converts medium-voltage AC power directly to low-voltage DC. Data centers are increasingly moving toward DC systems for efficiency reasons, a shift Nvidia and others are encouraging.

With dozens of companies chasing data center contracts, investors are likely to wait until Enphase can show actual sales numbers before assigning value to the new segment.

On the analyst front, Wells Fargo cut its price target from $50 to $45 but kept an “overweight” rating. Barclays sits at $31 with an “underweight.” Morgan Stanley also holds an “underweight” at $30. The stock’s consensus rating is “Hold” with an average target of $41.20.

ENPH traded around $30.63 on Wednesday, well below its 50-day moving average of $39.37. The stock hit a 52-week low of $25.77 earlier this year and a high of $54.43.

The company’s market cap sits at approximately $4.04 billion. Institutional investors hold 72.12% of the stock.

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