Key Points
Enphase stock tumbled 19% last week after missing on earnings.
Wall Street analysts cut price targets on weak Enphase guidance.
Northland still thinks Enphase stock is a buy.
Enphase Energy (NASDAQ:ENPH) investors had a tough time of things last week. Shares of the solar power microinverter-maker closed the week down nearly 19% after the company missed badly on earnings Tuesday.
But today is a new day -- and a new week -- and Enphase stock is rocketing higher, up 10.3% through 1:25 p.m. ET. The question is: Why?
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Enphase Q3 earnings
There doesn't appear to be any good news moving Enphase stock higher today, after all. In the wake of the earnings disappointment, about the only thing we've seen happen on Enphase is... a series of price downgrades and target cuts by Wall Street analysts.
After Enphase reported its 28.5% decline in sales and its 90% decline in operating income last week, analysts lined up to diss the stock. Morgan Stanley, for example, cut its price target to $16 and warned of continued weakness in residential solar sales, predicting it could be as long as 2028 before we see even a "modest recovery" in this market.
Oppenheimer complained that in addition to missing on earnings, Enphase guided "well below expectations" and suggested investors wait to see signs of an uptick in demand "before stepping in to buy shares."
Most recently, Northland analyst Gus Richard cut his price target to match his lower 2027 earnings estimates. The good news, though, is that Richard still reiterated an "outperform" rating on the stock, which he thinks could return to $36 within a year.
What's next for Enphase stock
Is that realistic, though? In its guidance last week, Enphase management warned that sales are likely to decline in Q4, with further deterioration of gross margins besides.
At a 25x free cash flow valuation, with profits worsening rather than improving, I still see little reason to own Enphase stock today.
Rich Smith has no position in any of the stocks mentioned. The Motley Fool recommends Enphase Energy. The Motley Fool has a disclosure policy.