Tuesday, Canaccord Genuity adjusted its price target on SolarEdge Technologies (NASDAQ:SEDG), a company specializing in inverter solutions for solar power systems, reducing it to $38 from the previous $58. The firm has also reiterated its Hold rating on the stock.
The revised price target reflects concerns about the current state of the inverter sales channel, which is reportedly saturated with inventory. This situation is affecting demand in both the U.S. and European markets. Just last week, a German competitor, SMA Solar, announced a significant cut in its FY24 revenue forecast by 22% at the midpoint, citing market volatility and delayed order increases due to high inventory levels at distributors and installers.
Canaccord Genuity's decision comes in the wake of SMA Solar's announcement and the broader industry challenges. The firm has also adjusted its full-year 2024 revenue estimates for SolarEdge to approximately $1.458 billion and anticipates an adjusted loss per share of ($3.94). This outlook is based on an expected extended period of under-shipment to SolarEdge's distributors and installers, who have been postponing payments amidst high inventory levels.
The new price target of $38 is derived from a 9.7x P/E multiple that Canaccord Genuity has applied to its 2025 earnings estimates for SolarEdge. Despite the challenges faced by the industry and the company, Canaccord Genuity maintains its Hold rating, suggesting a neutral stance on the stock's investment potential at present.
In other recent news, SolarEdge Technologies has been experiencing a series of adjustments in stock price targets by various analysts. RBC Capital maintained its Sector Perform rating on SolarEdge, noting the company's performance aligns with expectations and kept a steady price target of $71.00.
However, Wells Fargo reduced the target to $62.00 due to lower-than-expected product sell-through and margin projections. Susquehanna downgraded the stock from Positive to Neutral, slashing the price target to $56, following SolarEdge's second-quarter revenue guidance, which fell short of Wall Street's expectations.
Mizuho Securities also adjusted its outlook, reducing the price target to $84 due to decreased end-market demand and slower inventory reduction.
Furthermore, the US solar industry, including SolarEdge, is preparing for a potential surge in solar installations, following the expiration of a tariff holiday on solar panels from Southeast Asia. This development will require developers to utilize approximately 35 GW of duty-free imported panels stockpiled in warehouses before the year's end. The reinstatement of these tariffs could accelerate the pace of project construction, which has already seen a substantial increase.
InvestingPro Insights
Amidst the adjustments in price targets and the broader industry challenges faced by SolarEdge Technologies (NASDAQ:SEDG), recent data from InvestingPro provides additional context for investors. The company's market capitalization stands at a modest $1.59 billion, reflecting the impact of recent market movements on its valuation. Furthermore, the stock's P/E ratio has dipped into negative territory, currently at -7.19, indicating that the company is not generating net income at the moment.
InvestingPro Tips highlight that SolarEdge is experiencing significant volatility, with the stock price taking a considerable hit over the past week, month, and six months. This is consistent with the broader trend of the stock trading near its 52-week low, underscoring the cautious stance taken by analysts. Moreover, SolarEdge's cash burn is a concern, as it quickly depletes its reserves, which could impact its financial stability in the short term. Despite these challenges, it's worth noting that the company's liquid assets do exceed its short-term obligations, providing some cushion against immediate financial pressures.
For investors seeking a deeper dive into SolarEdge's financial health and stock performance, InvestingPro offers additional insights. With 17 more InvestingPro Tips available, including analysis on sales decline expectations and gross profit margins, investors can gain a comprehensive understanding of the company's prospects. To access these valuable tips and make more informed investment decisions, consider using the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription at https://www.investing.com/pro/SEDG.
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