Shares of Enphase Energy slumped 17% in premarket trading on Friday, after the solar inverter maker's third-quarter revenue target fell well short of analyst estimates due to weak demand.

Appetite for solar equipment has been tepid in the United States due to lukewarm demand in states such as Texas and Arizona where cheaper electricity prices make the economics of residential solar less attractive.

The Fremont, California-based company forecast revenue between $550 million and $600 million for the quarter ending Sept. 30, compared with analysts' estimate of $746.5 million.

"We are assuming the same level of uncertainty continues going forward. Therefore, we are taking aggressive and prudent actions in the U.S. to manage down the channel inventory," said Enphase Energy CEO Badrinarayanan Kothandaraman.

Analysts at Evercore ISI said the company's U.S. business is taking a one-time correction in its inventory levels in the third quarter, but growth in European markets is accelerating.

Enphase also announced a new $1 billion share buyback plan, which failed to stem the share selloff.

Shares of rival SolarEdge Technologies Inc, which is expected to report results on August 1, slid 6.3%.

In stark contrast, First Solar announced plans to spend up to $1.1 billion in its fifth U.S. factory to meet booming demand for American-made solar panels, sending its shares 8.9% higher.

(Reporting by Medha Singh in Bengaluru; Editing by Krishna Chandra Eluri)