Americas Clean Technology Solar Recalibrating estimates for resi solar lower as headwinds persist

Equity Research 20 September 2026 | 11:06PM EDT

AMERICAS CLEAN TECHNOLOGY: SOLAR

Recalibrating estimates for resi solar lower as headwinds persist; ENPH remains well positioned despite risk to near-term expectations

In the wake of a weaker than anticipated resi recovery over the near-term in Brian Lee, CFA | conjunction with ongoing macro headwinds (e.g. interest rates), we see a more Goldman Sachs & Co. LLC

subdued recovery for resi solar fundamentals into year-end with risk to expectations Tyler Bisset, CFA | likely persisting into a typically seasonally-weaker 1Q27 period as well. Within the Goldman Sachs & Co. LLC resi sector, we highlight ENPH (Buy) given its higher margin profile in conjunction Keshav Choudhary | with several near-term growth drivers from new product launches, though we do Goldman Sachs India SPL acknowledge the bar appears high heading into 2027. Additionally, we acknowledge the potential valuation headwind from rising interest rates on RUN (Buy), while we maintain a cautious view on SEDG (Sell). We provide more takeaways regarding resi solar data trends, potential impacts from higher interest rates, and estimate changes here within.

PM Summary: Resi weakness weighing on valuations and estimates, but continue to see future growth potential

Leading indicators pointing to weaker resi recovery than anticipated amid rising interest rates. We are incrementally more cautious on the near-term outlook for the resi solar sector as a result of weaker than expected leading indicators for installations as well as the recent increase in interest rates. In particular, resi solar installations in 2Q26 declined by 21% yoy, and origination trends in 3Q26 were down 30% yoy. At the same time, on September 16, the Federal Reserve raised benchmark interest rates by 25bps to 3.75%-4.00%, marking the first interest rate increase in three years, while also signaling for another rate hike later this year. While we continue to view affordability and rising utility rates as supportive of resi solar deployments, given the sensitivity of interest rates to solar returns, we see the increase in rates as a headwind to future growth. Additionally, we believe there are risks to consensus expectations across select resi solar companies based on market fundamentals. Lastly, while the resi solar group has outperformed the utility-scale segment year to date, we see potential risks to valuations as a result of sentiment, higher interest rates, and consensus revisions. As a result, we take a tempered view on the near-term outlook for stocks exposed to resi solar, while continuing to favor utility-scale equities.

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Goldman Sachs Americas Clean Technology: Solar

Exhibit 1: Residential installers have outperformed Exhibit 2: Consensus sales estimates for utility-scale solar utility-scale installers, YTD suppliers have improved, while estimates for residential YTD stock performance, % solar have largely declined Sales consensus estimate changes, 2026 YTD, %

12% Residential installers Utility-scale suppliers 10% 100% 8% 80% 6% 4% 60% 2% 40% 0% 20% -2% -4% 0% -6% -20% -8% SHLS ARRY NXT RUN ENPH SEDG -40% Jan-26 Feb-26 Mar-26 Apr-26 May-26 Jun-26 Jul-26 Aug-26 Sep-26 Utility-scale solar Residential solar

Residential installers include ENPH, SEDG, RUN; utility-scale suppliers include Source: FactSet SHLS, ARRY, NXT, FSLR

Remain focused on high-quality growth. We continue to favor market-share leaders more exposed to utility-scale solar, such as NXT (Buy, on CL) and FSLR (Buy), while focusing on higher margin businesses with differentiated products within the resi market such as ENPH (Buy). Additionally, our revised price target for RUN…