Enphase Energy Inc (NASDAQ:ENPH) shares are trading higher by 1.8% to $119.22 Tuesday morning after hitting a new 52-week low during Monday’s session. The stock fell on Monday after Citigroup analyst Vikram Bagri maintained Enphase Energy with a Buy and lowered the price target from $209 to $170.
Enphase Energy shares have fallen in recent sessions amid a rise in Treasury yields. Renewable energy companies often rely on debt financing to fund their projects and operations. When Treasury yields rise, the cost of borrowing also increases.
Enphase Energy, like other companies in its industry, may face higher interest expenses, which can negatively impact its profitability and, consequently, its stock price.
In general, when Treasury yields rise, the risk-free rate of return for investors increases. This means that investors can earn a higher return by investing in relatively safer Treasury securities compared to riskier assets like stocks.
As a result, the discount rate used in valuation models for stocks, such as the dividend discount model or discounted cash flow analysis, also rises.
For Enphase Energy, higher discount rates can lead to a lower present value of its future cash flows, causing its stock price to decline.
According to data from Benzinga Pro, ENPH has a 52-week high of $339.92 and a 52-week low of $116.86.
