Enphase posts record quarter. Stock slides on chip shortage pains

Jonathan Fisk, Director of Solaray, moves a solar panel in the solar power installation company’s facility in Sydney.

Jason Reed | Reuters

Enphase Energy shares fell more than 14% on Wednesday after the company warned of the ongoing effects of the chip shortage.

The company, which makes microinverters for solar systems, reported first-quarter earnings and sales on Tuesday that exceeded analysts’ estimates. Enphase also had record sales. However, the weak forecast for the second quarter caused the stock to fall.

Enphase expects second quarter revenue to be between $ 300 million and $ 320 million, compared to Street projections of $ 320.7 million, according to FactSet estimates.

“Looking into the second quarter, our shipments will be limited by the availability of semiconductor components,” said Badrinarayanan Kothandaraman, President and CEO of Enphase, on the company’s earnings call.

“Although we are increasing the capacity of solar microinverters on a quarterly basis and demand is increasing on a quarterly basis, supply cannot keep pace with demand due to semiconductor and component restrictions,” he added, noting that this will result in a “slower ramp” will “from the third quarter.

Chip deficiency pain

Enphase is far from the only company feeling the pain of being short of chips. The slowdown has also hit the auto industry, among others, as companies like GM and Ford shut down production at several plants.

The White House met with executives from the auto, technology, biotech and consumer electronics industries earlier this month to discuss the supply shortages.

Enphase’s decline on Wednesday weighed on the broader solar space. SolarEdge, Sunrun, Sunnova and SunPower each fell by at least 2%.

Enphase stock rose 571% in 2020, making it one of the top performing names in the market. But for 2021, the stock is now down more than 16%.

Still, Goldman Sachs, JPMorgan and Barclays were among the Wall Street firms that recommended buying the dip.

“The silver lining to us is obvious: those looking to look at ENPH long-term will properly view this potentially temporary headwind as a buying opportunity for any weakness,” noted Barclays, while Goldman said “demand and margins remain robust.” “

When prompted for results, Kothandaraman said the company would work with new suppliers, but the component restrictions would remain in place for the remainder of the year.

CNBC’s Jim Cramer said Tuesday night that he still believes in the company. He noted on “Mad Money” that he would take half a position at the current level and then wait for the other half to see how things play out. Given that the company has been among the top performers for the past five years, he said it has “become a high multiple victim that people say they forget”.

– CNNBC’s Michael Bloom contributed to the coverage.

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