On Thursday, RBC Capital Markets adjusted its outlook for SolarEdge Technologies (NASDAQ:SEDG), reducing the shares price target on the stock to $71 from $74 while maintaining a Sector Perform rating. The adjustment follows SolarEdge's recent financial performance and market conditions.
The company's first quarter revenues for 2024 surpassed consensus expectations, yet gross margins did not meet projections. The second quarter outlook presented further concerns, indicating weaker than anticipated results. RBC pointed to the ongoing issue of channel inventory dynamics and recent price reductions as factors contributing to the cautious stance.
According to RBC Capital, the rate at which excess stock is being sold off is slowing, and expectations for normalized demand are diminishing. The analyst noted that until there are clearer signs of a demand rebound, which would in turn suggest a potential margin recovery, SolarEdge's shares are likely to remain at their current low levels.
The revised price target of $71 reflects the lowered estimates based on these market challenges. RBC Capital's commentary suggests that investors may have to wait for more definitive indicators of market improvement before seeing a positive shift in SolarEdge's stock performance.
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