Jefferies has moved Enphase Energy up to a Buy recommendation from Hold and lifted its price target to $57 from $37, pointing to improving demand visibility and the potential for expanding margins after an expected volume trough in 2026.
The firm said its earlier caution was driven by uncertainty over how large and durable any volume recovery would be. Recent channel checks, however, have increased Jefferies' confidence in several parts of Enphase's business, particularly its power purchase loan offering.
Jefferies noted that Enphase is collaborating with Greentech - identified as the largest U.S. solar distributor - and Concert Finance via the Propel Loan Program. Those partnerships, the brokerage said, lend support to the loan product and to the company's ability to monetize related tax credits. Jefferies added that conditions in the credit transfer market appear to be stabilizing, which eases concerns about converting tax credits tied to power purchase loans into realizable value.
While Jefferies expects initial results from the loan offering to surface in the second half of 2026, it anticipates more meaningful upside from 2027 onward.
On the product front, Jefferies highlighted the roll-out of the IQ9 inverter. The firm said IQ9 improves power density and reduces unit costs by about 10%. Roughly 50,000 IQ9 units were ordered in the first quarter, a level that Jefferies estimates equates to about a 4% share of the two gigawatt rooftop commercial and industrial market on an annualized basis. Company management has cited incremental gross margins of roughly 80% on IQ9 units - a figure that supports Jefferies' view that corporate gross margin could approach 50% beginning in 2027.
In Enphase's storage business, Jefferies reported that the IQ10C accounts for about 70% of U.S. battery shipments. The brokerage described the forthcoming fifth generation battery as offering roughly 50% higher energy density and about 40% lower costs than the prior generation, a combination that it said positions Enphase to compete more directly with Tesla in the home storage market.
Reflecting these developments, Jefferies increased its 2028 EBITDA estimate by 15%, and noted that its projection now sits about 14% above consensus. The upgrade in expectations is driven by assumptions of higher volumes, margin expansion and a more supportive interest rate backdrop.
Key points
- Jefferies upgraded Enphase to Buy and raised its price target to $57, citing improving demand visibility and margin potential.
- Channel checks support confidence in the power purchase loan program, aided by partnerships with Greentech and Concert Finance through the Propel Loan Program.
- Product gains - IQ9 inverter uptake and a new fifth generation battery - underpin margin and competitive position improvements in inverters and home storage.
Risks and uncertainties
- Uncertainty remains around the ultimate scale and durability of volume growth, which was the basis for Jefferies' earlier caution - this impacts revenues across the solar equipment and storage sectors.
- Monetizing tax credits tied to power purchase loans depends on credit transfer market conditions; instability there could affect financing-related cash flows and adoption of loan products.
- Timing risk - initial loan program results may not appear until the second half of 2026, with more meaningful benefit expected from 2027, creating a near-term execution and visibility gap.