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On Tuesday, Bank of America analysts adjusted their forecasts for SolarEdge Technologies (NASDAQ: NASDAQ:SEDG) and Enphase Energy (NASDAQ: NASDAQ:ENPH) stocks due to increased policy risks. The analysts cited concerns over stalled demand, expiring incentives, and policy friction as significant factors influencing their decision. According to InvestingPro data, SEDG has seen a 25.7% gain year-to-date despite these challenges, though the stock remains significantly below its 52-week high.
The revised estimates reflect a notable reduction in projected U.S. volumes for both companies in 2026. Enphase Energy’s estimated U.S. volumes were lowered to 1.8 gigawatts from the previous 2.66 gigawatts. Similarly, SolarEdge Technologies’ projections were reduced to 1.9 gigawatts from 2.1 gigawatts, with both companies maintaining a roughly 50% residential and commercial/industrial mix. This comes as SolarEdge faces significant headwinds, with InvestingPro showing a 59% year-over-year revenue decline and analysts maintaining a hold consensus on the stock.
According to the analysts, these adjustments indicate a 27% decline compared to 2024 industry volumes. This figure contrasts with Wood Mackenzie’s forecast of approximately 6 gigawatts for the U.S. residential market, highlighting the analysts’ concerns about potential risks to volumes. For deeper insights into SolarEdge’s financial health and growth prospects, including 13 additional ProTips and comprehensive valuation metrics, check out the detailed research report available on InvestingPro.
The analysts emphasized the outsized risk to volumes due to the aforementioned factors, which could impact the growth trajectory of both SolarEdge and Enphase in the U.S. market. The revised estimates underscore the challenges the companies may face in navigating the evolving policy landscape, particularly for SolarEdge, which currently has a market capitalization of $1 billion and is operating with moderate debt levels.
In other recent news, SolarEdge Technologies has seen a series of analyst updates and legislative developments impacting its stock and business outlook. GLJ Research upgraded SolarEdge’s stock rating from Sell to Hold, citing potential legislative support for solar energy tax credits with the upcoming return of a "Solar Friendly" Senate. This legislative shift is seen as a risk to short sellers, despite GLJ Research’s concerns about SolarEdge’s business model and market challenges. Additionally, Northland analyst Gus Richard upgraded SolarEdge from Underperform to Market Perform, maintaining a price target of $15.50. Richard highlighted SolarEdge’s strategic positioning in the utility-scale solar market and its cybersecurity strengths as factors for the upgrade.
Meanwhile, Guggenheim analysts expressed concern about legislative changes in the Inflation Reduction Act affecting residential solar companies, including SolarEdge. The amendments eliminate tax credits for leased solar assets, posing challenges for companies reliant on third-party financing. Despite these hurdles, Citi maintained a Buy rating for SolarEdge with a $39 price target, emphasizing the company’s resilience amid broader industry challenges. GLJ Research also raised its price target for SolarEdge to $6.90, up from $3.90, while reaffirming a Sell rating. The firm noted SolarEdge’s revenue recognition practices, which include safe harbor sales, as a temporary profitability boost, but remains cautious about long-term prospects due to rising U.S. Treasury yields. These developments reflect the complex landscape SolarEdge navigates as it contends with both market dynamics and legislative changes.
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