TD Cowen has adjusted its price target on shares of SolarEdge Technologies (NASDAQ: NASDAQ:SEDG), a company specializing in solar inverters and energy storage. The firm also reduced the target to $35.00 from the previous $50.00 while keeping a Buy rating on the stock.
The adjustment which came on Thursday follows SolarEdge's second-quarter 2024 results, which met the guidance previously confirmed in late June. However, the outlook for the third quarter of 2024 fell short of expectations due to persistently high channel inventory levels in Europe, which are expected to impact the company into 2025.
SolarEdge's management has set a revenue target of $550 million for the second quarter of 2025, anticipating a resolution to the inventory surplus.
The revised price target reflects a valuation of 6 times the company's projected 2026 enterprise value to EBITDA (earnings before interest, taxes, depreciation, and amortization) ratio, considering the inclusion of Investment Tax Credits (ITC) from the Inflation Reduction Act. Without these credits, the valuation stands at 11 times the 2026 EV/EBITDA.
InvestingPro Insights
Recent market data from InvestingPro underscores the challenges faced by SolarEdge Technologies (NASDAQ:SEDG). With a significantly reduced market capitalization of $1.27 billion, the company's stock has been under considerable pressure, as evidenced by a precipitous drop in price total return over the last year of -86.78%. This aligns with the analyst's conservative outlook, given the company's revenue decline of -34.19% over the last twelve months as of Q1 2024.
InvestingPro Tips highlight a few key concerns for investors. SolarEdge has been rapidly depleting its cash reserves and is expected to see a decrease in net income this year. Additionally, the company's stock has been trading at a low revenue valuation multiple, and with a current P/E ratio of -6.93, profitability remains a significant challenge. These factors contribute to the conservative price target set by TD Cowen.
Despite these headwinds, SolarEdge maintains a positive aspect in terms of liquidity, with liquid assets surpassing short-term obligations. For investors seeking a deeper analysis, there are 19 additional InvestingPro Tips available, offering further insights into the company's financial health and market performance.
For those considering an investment in SolarEdge, understanding the full picture is crucial. The InvestingPro platform provides a comprehensive suite of metrics and tips to help investors make informed decisions. Visit https://www.investing.com/pro/SEDG to explore these resources and gain a clearer understanding of SolarEdge's potential in a volatile market.
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