Solar stocks have taken a beating this year, no thanks in large part to rising interest rates. But one fund manager is bullish on the sector’s long-term prospects. “We like solar a lot because solar installations can be done anywhere – unlike wind plants. But they are an interest rate play at the moment; so, if interest rates go down – which they are at the moment – solar companies can do very well,” Steven Glass, managing director and investment analyst at the Australia-headquartered Pella Funds, told CNBC Pro. “Given the current macroeconomic environment, it is difficult to be bullish on solar stocks in the short-term unless one takes the view that interest rates will come down quickly, which is not our current view,” he added. Solar energy stocks did, however, react positively to the U.S. Federal Reserve ‘s Dec. 13 decision to hold short-term interest rates steady. Shares of Sunrun were up 19.7%, while that of SunPower were up 17.8% on Dec. 13. ‘Market share leader’ While Glass is waiting for “inventories to normalize and revenue growth to resume,” one solar energy stock stands out to him as a longer-term play. That’s Enphase Energy , a U.S. energy tech company that develops and manufactures battery energy storage systems and charging stations for electric vehicles. “We remain bullish on Enphase in the longer term as it is the technology and market share leader in inverters, solar rooftop penetration remains low and the world clearly needs more solar given the shift to EV and problems with offshore wind,” Glass said. Shares in Enphase Energy took a hit earlier this month after the stock was removed from the Nasdaq 100, but rose 7.8% on Dec. 13 after the Fed’s announcement. Year-to-date, shares were down nearly 60% to $107.61 on Dec. 13. ENPH YTD mountain Year-to-date shares in Enphase Nevertheless, Glass remains optimistic on the stock, saying he’s “not concerned about changes in index constituents as that only affects the short-term performance of a company whereas we tend to take a long-term view based on fundamentals.” Short-term caution However, he is cautious on its near-term performance, “as interest rates are expected to remain high, resulting in a higher payback period which reduces demand, and inventories are also elevated.” Analysts from Guggenheim Securities share that caution, giving it a neutral rating in their Dec. 11 note. “Although we do expect revenue to recover sequentially over the course of 2024, we believe the Street’s expectations for the pace of that recovery are too high, and that the consensus starting point for Q124 is also too high,” the analysts wrote. They expect the company’s 2024 revenue to come in at $1.6 billion — well below the “visible alpha consensus number of $1.9 billion. “We believe that many investors already have lower expectations,” they wrote, adding that the stock is fairly valued right now. According to FactSet, only 20 of the 41 analysts covering the stock give it a buy or overweight rating. Another 20 have a hold rating and one has an underweight rating. The analysts’ average price target on Enphase Energy is $113.36, giving it 5.3% upside potential. — CNBC’s Michael Bloom contributed to this report.