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On Wednesday, Citi analyst Vikram Bagri maintained a Sell rating on SolarEdge Technologies (NASDAQ:SEDG) with a steady price target of $9.00, near the low end of analyst targets ranging from $9 to $40. Bagri’s assessment followed SolarEdge’s report of a slight improvement in top-line revenue and higher-than-expected margins, though InvestingPro data shows the company’s gross profit margin remains deeply negative at -69.3%. The company recently faced challenges, including inventory impairment due to a slower recovery in the European Union and the need to restate financials after a customer contract amendment.
SolarEdge’s stock has shown resilience, recently surging 27.4% in just one week according to InvestingPro data, as the company’s first-quarter margin outlook appeared more favorable compared to previous estimates. Notably, SolarEdge had missed margin expectations in four of the last five quarters. The company also provided guidance indicating positive free cash flow (FCF) throughout 2025, contrasting with earlier forecasts which anticipated positive FCF by the first half of the year. This guidance comes as the company operates with a moderate debt level and maintains a healthy current ratio of 2.34, indicating strong short-term liquidity.
Despite the optimistic margin outlook and FCF guidance, Citi highlighted that SolarEdge did not disclose specific details regarding the magnitude of first-quarter cash generation or the expected contribution from 45X credits. Additionally, SolarEdge’s fourth-quarter sell-through of $400 million, coupled with a first-quarter revenue outlook of $205 million, suggests a reduction of approximately $200 million in channel inventory during the current quarter. The company aims to nearly normalize inventory levels by the end of the second quarter.
The impact of price reductions on market share remains to be determined, as SolarEdge continues to navigate the competitive landscape. The company’s strategic efforts and financial performance will be closely monitored by investors and analysts alike, as they assess the potential for future growth and profitability.
In other recent news, SolarEdge Technologies reported fourth-quarter 2024 earnings with revenues of $196.2 million, slightly surpassing the expected $194.95 million. However, the company experienced a significant earnings per share (EPS) loss of -$3.52, missing the forecasted -$1.5, primarily due to asset write-downs and impairments. Despite the earnings miss, SolarEdge’s outlook for the first quarter of 2025 remains positive, with projected revenues between $195 million and $215 million, aligning with or slightly exceeding consensus estimates. Analysts from JPMorgan raised the company’s price target from $19 to $24, maintaining an Overweight rating, indicating confidence in the company’s positive free cash flow and future performance. Oppenheimer analysts, however, maintained a Perform rating, expressing caution about the pace of recovery, particularly in the European market. SolarEdge is expected to benefit from positive free cash flow, and the company anticipates continued revenue stabilization in the U.S. and EU markets. Additionally, SolarEdge is launching new products, including the NexSys line, in the fourth quarter of 2025, which is expected to enhance its competitive position.
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