Jefferies upgraded Enphase Energy (ENPH.US) from "underperform" to "hold" on Thursday with a $36 price target, citing expectations for better-than-expected revenue in the near term while acknowledging ongoing concerns about the residential solar outlook in the coming years.
While recent U.S. Treasury guidance has been favorable for the residential solar industry, Enphase Energy's stock has risen only about 10%. Jefferies analyst Julien Dumoulin-Smith believes the market is disconnected from the value of safe harbor spending, stating that this disconnect is likely given the visibility of investment tax credit (ITC) policies extending through 2030.
Dumoulin-Smith downgraded Enphase Energy in November 2024, but now believes the near-term situation has improved given the extended visibility of ITC policies through 2030. The company is expected to deliver above-consensus revenue through the third quarter of 2026, as third-party owners (TPOs) rush to purchase equipment before July 2026 to capture tax benefits.
"Yes, there are significant long-term challenges, but at least in the medium to short term, we believe it's time to step up and give credit where credit is due," the analyst wrote in his upgrade note.
On August 19, Enphase Energy announced a new safe harbor agreement with another leading solar and battery financing company that provides TPO agreements to homeowners, including lease and power purchase agreements (PPAs). This marks the second such agreement since the new federal budget legislation was signed into law in July 2025.
The agreement, signed in early August, is expected to generate approximately $50 million in revenue for Enphase Energy and highlights the company's strong participation in the TPO space—a key growth channel for U.S. residential solar and battery business.
The safe harbor agreement covers Enphase Energy's U.S.-manufactured IQ8HC™ microinverters, helping future projects maintain eligibility for the base Investment Tax Credit (ITC) and domestic content bonus credits. By including equipment in safe harbor agreements now, solar companies can lock in current tax credit eligibility and reduce risks from future policy changes.
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