Enphase Energy, a leading supplier of microinverters and battery systems for solar installations, saw its shares drop over 15% the day after the release of its first quarter 2025 financial results, as the company missed both revenue and earnings expectations and provided guidance that disappointed investors.
Q1 Results Fall Short of Expectations
For Q1 2025, Enphase reported revenue of $356.1 million, representing a 35% increase year-over-year but falling short of analyst expectations of around $361 million. The quarterly performance revealed a significant geographic divide in Enphase’s markets. U.S. revenue declined by 13% compared to the previous quarter, while European revenue grew by 7%, primarily driven by higher battery sales. Enphase shipped 1.53 million microinverters during the quarter and 170.1 MWh of its IQ Batteries. The company posted adjusted earnings per share of $0.68, missing consensus estimates of $0.72.
Several factors contributed to Enphase’s revenue shortfall. The U.S. residential solar market has softened considerably, with management citing typical first-quarter seasonality and broader economic challenges. High interest rates have dampened consumer demand, while many solar installers are experiencing cash flow difficulties that limit their ability to take on new projects.
Policy uncertainty around clean energy tax credits and the introduction of new tariffs have created additional complications. These tariffs are expected to reduce gross margins by approximately 2% in the coming quarter, with the company forecasting a non-GAAP gross margin between 42% and 45% for Q2.
Looking ahead to Q2 2025, the company provided revenue guidance of $340-$380 million, with the midpoint below what analysts had anticipated, further pressuring the stock.
Analyst Response
Following the earnings release, multiple financial firms revised their Enphase Energy investment outlook. Jefferies lowered its price target to $37, maintaining an Underperform rating, citing the challenging environment further complicated by tariffs. Guggenheim downgraded the stock to Sell with a price target of $33, describing the company’s report as worse than initially thought.
Morgan Stanley also reduced its stance to Underweight with a decreased price target of $36. RBC Capital acknowledged sluggish demand and unexpected early tariff impacts on Chinese-sourced batteries, cutting its target to $54 while maintaining a Sector Perform rating. Northland decreased its price target to $64 but retained an Outperform rating, noting that while Q1 results missed expectations due to lower gross margins, Enphase’s strategic moves in new products and geographic diversification may help mitigate some tariff burdens by 2026.
Enphase Energy is rated a Moderate Buy overall, based on the recent recommendations of 22 analysts. The average price target for ENPH stock is $64.37, which represents a potential upside of 42.82% from current levels.
