Enphase Energy (ENPH) Stock: Gaining On Asset Acquisition

Enphase Energy Inc ENPH Stock NewsEnphase Energy Inc (NASDAQ: ENPH) is having an overwhelmingly strong start to the trading session this morning, and for good reason. The company announced that it has entered into a definitive agreement to acquire an asset. Of course, the news excited investors, sending the stock on a run for the top. Today, we’ll talk about:

  • The asset acquisition;
  • what we’re seeing from ENPH as a result;
  • and what we’ll be watching for from the stock ahead.

ENPH Runs For The Top On Acquisition News

As mentioned above, Enphase Energy is having an incredibly strong start to the trading session this morning after the company announced that it is moving forward with an asset acquisition. In a press release issued in after-hours last night, the company announced a definitive agreement to acquire an asset. Under the terms of the agreement, the company will acquire SunPower’s (SPWR) microinverter business. The acquisition will take place for a purchase price of $25 million in cash and 7.5 million shares of ENPH. Here’s what the new asset brings to the company:

  • The new asset offers advanced AC modules (ACM). These modules are considered the future of residential solar.
  • Enphase is expecting to generate between $60 and $70 million annualized in the second half of 2019 at 33% to 35% margins.
  • The acquisition will add 140 patents to the ENPH portfolio.

In the release, the company said that it is expecting for the deal to close in the third quarter of 2018 with initial shipments taking place in Q4. Finally, the $25 million cash associated with the deal will be funded through the company’s balance sheet in two installments. In a statement, Badri Kothandaraman, President and CEO at ENPH, had the following to offer:

We are pleased to become the microinverter supplier for SunPower’s AC Modules… The IQ 7XS 320W AC microinverter in an ACM strongly complements SunPower’s high efficiency solar cells, communication and racking to create a high performance, high quality and easy-to-use Equinox™ Home Solar System, providing exceptional value to homeowners, dealers and architects.

The above statement was followed up by Tom Werner, CEO at SPWR. Here’s what he had to offer:

SunPower customers will continue to see the same quality, high performance that they see now as Enphase exclusively co-develops microinverters for our industry leading residential Equinox solar product… As a result of this strategic partnership, SunPower looks forward to benefitting from Enphase’s expertise, allowing us to continue containing costs, leveraging R&D support and helping streamline our business priorities.

What We’re Seeing From The Stock 

One of the first lessons that we learn when we start to dig into the market is that the news causes moves. In the case of ENPH, the news proved to be overwhelmingly positive. After all, with the asset acquisition, the company will see a strong increase of revenue. What investor wouldn’t that excite? So, it’s no surprise to see that the stock is on a run for the top today. Currently (8:15), ENPH is trading at $6.09 per share after a gain of $1.59 per share or 35.33% thus far today.

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What We’ll Be Watching For Ahead

Moving forward, the CNA Finance team will continue to keep a close eye on ENPH. In particular, we’re interested in following the closing of this transaction as it is still subject to customary closing conditions. We’re also interested in following the company following the acquisition as we’re interested in seeing the revenue growth. Nonetheless, we’ll continue to follow the news closely and bring it to you as it breaks!

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