NEW YORK Citing lower growth estimates for the upcoming year, RBC Capital downgraded Enphase Energy (ENPH, Financials) to “Sector Perform,” resulting in almost an 8% drop on Tuesday. Reducing its price target to $100 from $125, RBC also emphasized on the competitive pressures, that haven’t been reflected in the consensus expectations.

Christopher Dendrinos, RBC analyst, sounded the alarm over market dynamics, especially with the rising adoption of third-party-owned (TPO) systems, involving obtaining more tax credits under the Inflation Reduction Act and high interest rates. These elements expected to slow down demand for Enphase in 2025 substantially. Although YTD battery demand has surpassed projections, Dendrinos thinks Enphase’s market share increases may top out, especially in California, where Tesla’s Powerwall 3 is likely to provide stiff competition.

Though Dendrinos believes the business may reclaim share with the release of its next-generation 10kW battery and new products in early 2025, Enphase is also out on its market position in the backup power markets. Notwithstanding these troubles, the analyst pointed out that these upcoming developments might enable Enphase to recover its market share and result in sizeable cost reductions.

This article first appeared on GuruFocus.