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On Wednesday, Truist Securities maintained a Hold rating on SolarEdge Technologies (NASDAQ:SEDG) with a steady price target of $14.00. According to InvestingPro data, the stock appears overvalued at current levels, with analyst targets ranging from $9 to $40. Analyst Jordan Levy highlighted SolarEdge’s fourth-quarter revenue, which surpassed Wall Street estimates by approximately 5%, primarily due to higher-than-expected inverter shipments. The company’s gross margins (GMs) and earnings per share (EPS) fell short of expectations, reflecting broader profitability challenges, as evidenced by the negative 69.3% gross profit margin in recent quarters.
Despite these impairments, SolarEdge managed to generate $26 million in free cash flow (FCF) for the quarter, defying both Truist and Street predictions that forecasted cash flow deficits. This positive cash flow comes despite InvestingPro analysis showing the company has been quickly burning through cash, with a negative free cash flow yield. Additionally, the company’s guidance for first-quarter gross margins is more optimistic than anticipated, with a midpoint of 8%, surpassing both Truist’s and Street’s estimates of 1% and 4%, respectively. Revenue guidance for the first quarter aligns with expectations.
The positive financial results come on the heels of several challenging quarters for SolarEdge, as well as persistent weakness in the European market. However, the recent appointment of Shuki Nir as CEO in December 2024 appears to be setting a more hopeful tone for the company’s prospects in 2025.
Shares of SolarEdge Technologies saw a significant increase, trading up around 14% in pre-market trading following the announcement. The company’s ability to exceed revenue expectations and provide a strong gross margin forecast for the upcoming quarter has contributed to the positive pre-market performance of its stock.
In other recent news, SolarEdge Technologies reported its fourth-quarter 2024 financial results, revealing a wider-than-expected loss but exceeding revenue estimates. The company posted a non-GAAP net loss of $3.52 per share, which was significantly higher than the analyst estimate of a $1.66 loss per share. However, revenue reached $196.2 million, slightly above the consensus estimate of $194.95 million, although it marked a 17% decrease from the previous quarter’s $235.4 million. SolarEdge also achieved positive free cash flow of $25.5 million, a significant improvement from the previous year’s deficit of $136.7 million.
Oppenheimer maintained a Perform rating on SolarEdge following these results, noting the positive free cash flow as a key achievement. The company’s guidance for the first quarter of 2025 met or slightly exceeded analyst expectations, suggesting potential recovery in revenue and margins. SolarEdge anticipates first-quarter 2025 revenue to range between $195 million and $215 million, with a non-GAAP gross margin of 6% to 10%. Additionally, the company is focusing on inventory monetization and managing cash flow, with particular attention on its 2025 convertible notes.
The fourth quarter results were impacted by a $138 million write-down and impairment of various assets, affecting both GAAP and non-GAAP financials. Despite these challenges, SolarEdge’s CEO expressed optimism about the company’s turnaround, citing the return to positive free cash flow as a solid first step. Investors and analysts are keenly awaiting further details on the company’s strategic initiatives and financial health in the upcoming quarters.
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