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On Tuesday, Jefferies analyst Julian Dumoulin-Smith revised the price target for SolarEdge Technologies (NASDAQ:SEDG) shares, reducing it to $9.00 from the previous $12.00. The stock, currently trading at $13.92, has seen a 77% decline over the past year. Despite the adjustment, the firm maintains an Underperform rating on the stock. Dumoulin-Smith cited ongoing concerns in the residential sector as the reason for the revision, noting a shift in focus from the Inflation Reduction Act (IRA) to tariffs. According to InvestingPro analysis, the company is currently showing signs of being slightly undervalued.
SolarEdge, which has manufacturing operations in Israel, Italy, South Korea, and Vietnam, depends on China for certain essential components. The analyst believes that due to the company’s exposure to tariffs, there will be added pressure on the gross margins (GM). The estimated GM is projected at 6.5%, which is below the consensus of 7.3% and the company’s own guidance of 6-10%. InvestingPro data reveals the company’s current gross profit margin stands at -92.84%, confirming significant margin challenges.
The revised estimates come in the wake of these tariff concerns, with Jefferies expecting this impact to be reflected in the company’s financial performance. Dumoulin-Smith’s forecast for SolarEdge’s first-quarter revenue stands at $206 million, which aligns with the consensus.
Despite the headwinds faced by SolarEdge due to tariffs, Jefferies’ analysis suggests that the company’s gross margin will be affected, prompting the firm to adjust its estimates and price target accordingly. The new target of $9.00 reflects the anticipated challenges SolarEdge may encounter in the current fiscal quarter.
In other recent news, SolarEdge Technologies has made several significant announcements. The company has adjusted its Board of Directors following the resignation of Mr. Marcel Gani and the upcoming departure of Mr. Dirk Hoke, reducing the board size from ten to nine members, with plans to decrease it further to eight. This change is not due to any internal disagreements, as confirmed by the company. Additionally, SolarEdge has partnered with Enstall and others to ease the IRS Domestic Content bonus credit compliance process, aiming to streamline tax credit monetization for developers and business owners.
In management updates, SolarEdge appointed Asaf Alperovitz as the new Chief Financial Officer, succeeding Ariel Porat. Alperovitz brings extensive experience from his previous roles, including CFO of Delta Galil. Truist Securities maintained its Hold rating on SolarEdge, highlighting the new CFO’s expertise and the company’s focus on financial stability and inventory normalization. Furthermore, SolarEdge’s solar inverter line now complies with the Build America, Buy America Act, allowing participation in federal infrastructure projects in the U.S.
This compliance includes various inverter models, supporting project developers in meeting federal mandates. The company’s ongoing strategic initiatives reflect its commitment to innovation and compliance in the evolving energy landscape.
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