Citron Reports on Enphase and Solaredge… Generac has just Crashed Your Honeymoon.
ENPH to Trade Down to $7 and SEDG to $52.
Shorting Shares of ENPH and SEDG Give Investors the Asymmetric Advantage in this Disruption
What you will read in this Citron Report that investors knew was inevitable:
Solaredge Technologies (SEDG) and Enphase Energy (ENPH), manufacturers of solar inverters for photovoltaic arrays, are trading at we believe significantly inflated multiples on peak earnings even as a very credible competitive threat is about to enter the solar inverter market.
Citron will prove that ENPH and SEDG have been overearning after changes to the electrical code and trade war escalation that has left a temporary competitive vacuum in the US residential solar inverter market.
Generac (GNRC) has taken #1 market share in every market it enters. The company is a major new competitive entrant that has the resources and track record to make a huge dent in both SEDG and ENPH’s market shares, but given that the company is followed by zero solar analysts, GNRC’s commercial launch that was announced last week has gone completely unnoticed.
Assuming multiple normalization and growth rate pressure as competition enters the market, we believe SEDG is worth $51-52 (-33-34% from current) and ENPH is worth $6-7 (-70-75% from current) over the next 6 to 18 months. Long term downside for SEDG is 55%+ and 80%+ for ENPH.