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On Wednesday, BMO Capital Markets reiterated its Underperform rating on SolarEdge Technologies (NASDAQ:SEDG) with a steady price target of $14.00. The firm’s stance comes as SolarEdge, currently valued at $848 million in market cap, approaches its first-quarter earnings report. The company’s stock has fallen over 75% in the past year, reflecting a challenging period marked by a significant 59% year-over-year revenue decline.
According to BMO Capital, the company’s second-quarter guidance was surprisingly better than anticipated, despite an expected 200 basis points impact from tariffs. However, SolarEdge now anticipates its free cash flow (FCF) to break even, a downgrade from previously positive forecasts. InvestingPro data reveals the company is quickly burning through cash, with negative free cash flow yield, though it maintains a healthy current ratio of 2.04x, indicating sufficient liquidity to meet near-term obligations.
BMO Capital’s analysis acknowledges the efforts of SolarEdge’s new management team in optimizing operational expenses. Still, the analysts believe that achieving a positive EBITDA could take several quarters, with current EBITDA at -$1.29 billion. Get access to 10+ additional exclusive InvestingPro Tips and comprehensive financial analysis in our Pro Research Report.With the residential solar market’s health in question, the firm advises caution and has chosen to maintain its current stock rating. Based on InvestingPro’s Fair Value analysis, the stock appears fairly valued at current levels.
The assessment by BMO Capital emphasizes the firm’s cautious outlook on the residential solar sector, where SolarEdge operates. The company’s expected near-term financial performance and the broader industry context play a significant role in BMO Capital’s evaluation of the stock’s prospects.
In other recent news, SolarEdge Technologies has been the focus of several analyst updates and company developments. Northland upgraded SolarEdge from Underperform to Market Perform, although it lowered the price target to $12.50, citing the company’s positive cash flow and efforts to cut costs. In contrast, Morgan Stanley (NYSE:MS) downgraded the stock to Underweight with a reduced price target of $10, reflecting concerns over declining demand and potential tariff impacts. Jefferies also adjusted its price target to $9.00 due to tariff worries, maintaining an Underperform rating and projecting a first-quarter revenue of $206 million.
SolarEdge has announced changes to its Board of Directors, reducing its size following the resignations of directors Marcel Gani and Dirk Hoke. The company stated these changes are not due to disagreements on company operations. Additionally, SolarEdge, in collaboration with Enstall and other partners, introduced a solution to assist with IRS Domestic Content bonus credit compliance, aiming to simplify tax credit processes for developers and business owners. This initiative highlights SolarEdge’s commitment to supporting the clean energy sector by easing regulatory compliance and enhancing financial optimization.
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