Enphase Energy (NASDAQ:ENPH) shares declined 15.8% in pre-market trading on Wednesday after the solar technology company reported third-quarter 2026 earnings and revenue below analyst expectations and issued fourth-quarter guidance significantly weaker than market forecasts.
The company reported adjusted earnings per share of $0.41, missing the consensus estimate of $0.51. Revenue reached $293.3 million, below analysts’ expectations of $303.85 million and down sharply from the previous year.
The results reflected continued pressure on residential solar demand, with higher borrowing costs and changes to US tax incentives affecting market conditions.
Enphase expects fourth-quarter 2026 revenue of between $225 million and $255 million, representing a midpoint of $240 million.
The forecast is approximately 20% below the analyst consensus of $300.5 million and indicates a further sequential decline in revenue.
The company is also reducing shipments to distributors to bring inventory levels into line with demand ahead of the seasonally weaker first quarter.
The combination of lower expected sales and ongoing inventory adjustments contributed to the negative market reaction.
Chief Executive Officer Badri Kothandaraman identified “higher interest rates and the expiration of the Section 25D federal tax credit” as continuing challenges for the US residential solar market.
Higher financing costs have affected demand for residential solar installations, while the expiration of the federal tax incentive has added further pressure.
In Europe, Enphase reported an approximately 11% sequential decline in revenue, with particularly weak demand in France.
The company faces softer market conditions across its major geographical regions, affecting near-term sales expectations.
JPMorgan analyst Mark Strouse lowered the firm’s price target for Enphase shares to $29 from $35, while maintaining a Neutral rating.
The revision reflected weaker economic conditions across the company’s markets and its decision to reduce distributor shipments ahead of the first quarter.
GLJ Research also maintained its Sell rating, with a price target below the prevailing share price.
The latest analyst revisions followed several other price target reductions in recent weeks, reflecting concerns about residential solar demand and the company’s near-term revenue outlook.
Enphase’s 15.8% pre-market decline brought its shares closer to their 52-week low of $25.77.
The decline contrasted with relatively modest movements in broader US equity markets. The S&P 500 gained 0.1%, while the Nasdaq advanced 0.6% and the Dow Jones Industrial Average edged lower.
The share price reaction followed the company’s earnings miss and fourth-quarter revenue forecast, which fell substantially below market expectations.
Enphase’s third-quarter results highlighted continued challenges in residential solar demand across the United States and Europe.
Revenue of $293.3 million and adjusted earnings per share of $0.41 both missed consensus forecasts, while the fourth-quarter revenue midpoint of $240 million was approximately 20% below expectations.
The company’s efforts to reduce distributor inventory, combined with higher interest rates and weaker European sales, remain important factors in its near-term performance.
Investors will be monitoring demand conditions, inventory adjustments and the company’s ability to stabilise revenue as it enters 2027.
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