Prescience Point Capital Management Issues Negative Research Report on Enphase Energy, Inc. (NASDAQ: ENPH)
- Prescience Point believes that Enphase Energy's purported turnaround under its new CEO is a sham.
- Prescience Point's analysis indicates ENPH's 43.7% gross margin expansion from Q2'17 to Q1'18 defies logic, having occurred in the absence of any apparent catalysts (e.g. a game-changing new product, restructuring of manufacturing operations, etc.) and during a time period when its inverter volume declined by 21.2% (i.e. lower fixed cost absorption).
- Casting further doubt on the reliability of its financial statements, ENPH reported an incredible 19.9% YoY increase in Q1'18 revenue per inverter -- a number completely out of line with the decline in revenue per inverter reported in each of the 16 quarters prior and that directly contradicts management's projection of a 2% ASP decline per quarter in FY'18 (conveyed just one quarter prior).
- Former CFO Bert Garcia suddenly departed Enphase in June 2018. New CFO Eric Branderiz, a former Tesla executive, is Enphase's fourth CFO in a little over six years as a public company.
- Prescience Point believes investor optimism over the recently announced SPWR deal is misplaced. Our analysis indicates that ENPH paid 34.4x annual EBIT for a limited five-year supply agreement - an incredibly value destructive transaction.
- Prescience Point questions the reliability of ENPH's financial statements and estimates its stock to have a fundamental value of ~$1/share, implying 85% downside.
BATON ROUGE, La., July 25, 2018 /PRNewswire/ -- Prescience Point Capital Management ("Prescience Point"), a private investment manager that focuses on investigations of public companies, published a negative research report today supporting its short position on Enphase Energy, Inc. (NASDAQ: ENPH), a maker of microinverter systems for residential and commercial use based in Petaluma, CA.
After a deep forensic analysis of the company's financial statements and a months-long investigation, Prescience Point believes that Enphase's shares are worth roughly 85% less than their current trading value, after surging about 5 times over the past 10 months. Our investigation indicates that the reliability of Enphase's financial statements has declined with each passing quarter since Q3'17. The company's accounting shenanigans appear to have begun following the appointment of Badri Kothandaraman as Enphase's new CEO in September 2017.
"After digging into Enphase's public filings and disclosures, we have become highly concerned about the credibility of its financial statements," said Eiad Asbahi, Founder and Portfolio Manager of Prescience Point. "For this reason, we have doubts about the Enphase turnaround story."
Prescience Point believes Enphase shares are currently worth about $1.00 on a fundamental basis.
Click here to download Prescience Point's full report on Enphase.
Prescience Point has a short position in Enphase and stands to benefit if its share price falls.
About Prescience Point Capital Management
Prescience Point Capital Management is a private investment manager that employs forensic investigative techniques to unearth significant mispricings in global markets. The firm specializes in extensive investigations of difficult-to-analyze public companies in order to uncover significant elements of the business that have been overlooked or ignored by others. Their publicly-available research focuses on exposing corporate wrongdoing and has been followed by resignations of auditors, CEOs and CFOs, earnings restatements, SEC investigations and stock delistings.
Prescience Point manages private funds on behalf of clients and principals and takes positions both long and short in support of their research. The firm invests across a broad set of equities that they believe have abnormally large disparities between what their underlying businesses are intrinsically worth and what their securities sell for.
The firm was founded by investor Eiad Asbahi in 2009 and is headquartered in Baton Rouge, LA. Prescience Point Capital Management is a registered investment advisor with the State of Louisiana a member of the Financial Industry Regulatory Authority, CRD number 152721. For updates follow Prescience Point on Twitter @PresciencePoint
Disclaimer
THIS RELEASE EXPRESSES SOLELY PRESCIENCE POINT CAPITAL MANAGEMENT'S OPINIONS. Use Prescience Point's research opinions at your own risk. This is not investment advice nor should it be construed as such. You should do your own research and due diligence before making any investment decisions with respect to the securities covered herein. Forward-looking statement and projections are inherently susceptible to uncertainty and involve many risks (known and unknown) that could cause actual results to differ materially from expected results. You should assume we have a short interest in Enphase Energy stock and therefore stand to realize significant gains in the event that the price of such instrument declines. Please refer to our full disclaimer located on the last page of our research report (linked herein).
SOURCE Prescience Point Capital Management
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