SolarEdge stock holds gains as Oppenheimer reiterates rating

On Wednesday, Oppenheimer maintained a Perform rating on SolarEdge Technologies (NASDAQ:SEDG) following the company’s financial results for the fourth quarter of 2024. SolarEdge reported revenues that surpassed expectations but fell short on margins and earnings per share (EPS). The company’s struggles are reflected in its significant revenue decline of 70.5% and concerning gross profit margin of -69.3% over the last twelve months, according to InvestingPro data. Despite these mixed results, Oppenheimer highlighted the generation of positive free cash flow (FCF) in the quarter as a key achievement.

SolarEdge’s guidance for the first quarter of 2025 was also a focal point, as it met or slightly exceeded analyst expectations. This outlook suggests that revenue and margins may have reached their lowest point, with recovery signs emerging from both the US and European markets. InvestingPro analysis reveals 16+ additional insights about SolarEdge’s financial health, including crucial data about its cash burn rate and debt management. The firm’s analysts are looking forward to further details on how SolarEdge plans to monetize inventory and manage cash flow in the upcoming quarter. Additionally, there is interest in the company’s strategy for its 2025 convertible notes, particularly given its moderate debt-to-equity ratio of 0.79.

The performance of SolarEdge’s stock in the early trading hours of Wednesday indicated stability, with shares expected to largely maintain their gains. While the stock has shown strong returns of over 27% in the past week, InvestingPro’s Fair Value analysis suggests the stock may be overvalued at current levels. This anticipation is based on the market’s outlook on the company’s cash management capabilities, supported by its healthy current ratio of 2.34.

Oppenheimer’s commentary comes after SolarEdge’s announcement of its financial performance, which included the notable achievement of generating positive FCF in the last quarter of 2024. This financial indicator is often seen as a measure of a company’s ability to generate cash and sustain its operations.

Investors and analysts alike are now awaiting further details from SolarEdge, which will provide deeper insights into the company’s financial health and strategic initiatives. The information regarding inventory monetization and cash flow expectations, as well as plans for the convertible notes due in 2025, will be crucial for assessing SolarEdge’s future prospects.

In other recent news, SolarEdge Technologies reported its fourth-quarter 2024 financial results, revealing a wider-than-expected loss but surpassing revenue estimates. The company recorded a non-GAAP net loss of $3.52 per share, significantly more than the analyst projection of a $1.66 loss per share. Revenue reached $196.2 million, slightly exceeding the consensus estimate of $194.95 million, although it marked a 17% decrease from the previous quarter’s $235.4 million. SolarEdge’s solar segment revenue was $189.0 million, down 15% from the prior quarter’s $222.1 million. The company shipped 895 MW of inverters and 130 MWh of batteries for photovoltaic applications during this period. A $138 million write-down and impairment of various assets affected both GAAP and non-GAAP financials. Despite these challenges, SolarEdge reported a positive free cash flow of $25.5 million for the quarter, a notable improvement from a deficit of $136.7 million in the prior year. Looking ahead, SolarEdge expects first-quarter 2025 revenue to be between $195 million and $215 million, with a non-GAAP gross margin of 6% to 10%. The company also anticipates non-GAAP operating expenses between $98 million and $103 million.

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