On Friday, BofA Securities adjusted its outlook on SolarEdge Technologies (NASDAQ:SEDG), reducing the price target from $54.00 to $44.00 yet keeping an Underperform rating on the stock. The revision comes in the wake of the company's first quarter update for the year 2024.
SolarEdge reported under-shipping demand by approximately $250 million in the first quarter, with expectations of a similar shortfall ranging between $250 million to $300 million in the second quarter. The firm anticipates that this trend will gradually decline towards the end of 2024.
The analyst from BofA Securities expressed continued caution regarding SolarEdge's shares, citing the under-shipment as a persistent issue that could potentially extend into 2025. This scenario is expected as the company might aim to adjust inventory levels within the distribution channels. The firm also indicated that SolarEdge's gross margin trajectory is at risk, largely due to its dependency on a recovery in volume.
The cautionary stance is further supported by the challenges SolarEdge faces, including the acceleration of destocking efforts and the difficulties present in European end-markets. The analyst reiterated the Underperform rating, signaling skepticism about the company's near-term prospects.
SolarEdge Technologies, known for its solar inverters and energy storage solutions, is navigating a complex market environment. The company's performance and stock valuation are being closely watched by investors as it attempts to manage supply chain dynamics and meet market demand.
InvestingPro Insights
Recent data from InvestingPro suggests that SolarEdge Technologies (NASDAQ:SEDG) is navigating a challenging period. With a market capitalization of $3.02 billion, the company is trading at a high earnings multiple, with a P/E ratio of -12.51 and an adjusted P/E ratio for the last twelve months as of Q1 2024 at -16.3. This reflects the broader market sentiment echoed by BofA Securities' recent price target adjustment.
InvestingPro Tips indicate that analysts have revised their earnings downwards for the upcoming period and anticipate a sales decline in the current year. The stock has experienced significant volatility, as evidenced by a 1-week price total return of -12.87% and a 1-year price total return of -82.14%, trading near its 52-week low. These metrics underscore the challenges highlighted by BofA Securities, including inventory adjustments and gross margin pressures.
To gain deeper insights and access additional InvestingPro Tips for SolarEdge Technologies, including whether analysts believe the company will be profitable this year or not, investors can explore https://www.investing.com/pro/SEDG. There are 17 additional tips available to help investors make more informed decisions. Use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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