slumped about 27% in premarket trading following the solar company's weaker-than-expected third-quarter revenue forecast over high inventories and slower installations in Europe.
The Israel-based company said "higher than expected inventory in the channels and slower than expected installation rates" had led to substantial cancellations and backlog clearing from its European distributors in the quarter. It also lowered its gross margin expectation. "We expect the miss to weigh on the entire solar space, but especially on Enphase. Europe had been viewed as the main growth driver, but this engine now looks to be faltering," Citi analyst Vikram Bagri said in a Friday note.A lower demand signifies channel inventory normalization will only occur in the entire sector at the end of the first quarter of next year, Bagri added.
TD Cowen analysts said the top line miss was not a huge surprise given the fluid market in Europe, but the gross margin miss was more concerning.
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