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Analyst Downgrade Sends SolarEdge (NASDAQ:SEDG) to Five-Year Low
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Analyst Downgrade Sends SolarEdge (NASDAQ:SEDG) to Five-Year Low

Story Highlights

SolarEdge sees a new five-year low thanks to poor earnings, worse guidance, unhappy analysts, and a macroeconomic minefield.

It has not been a good day for solar infrastructure stock SolarEdge Technologies (NASDAQ:SEDG). In fact, at one point in Thursday’s trading, it hit a low not seen in the last five years of trading. It’s bounced back a little since then but got worse not long after the rally, as SolarEdge is down just over 8% in Thursday’s session. Two big factors came together to give SolarEdge the bum’s rush straight to the bargain basement: the first was its earnings report, and the second was an analyst downgrade.

The earnings report featured a first-quarter loss that was larger than expected; it came in at -$1.90 per share when analysts looked for a loss of only -$1.59 per share. On perhaps the only plus side, revenue came in at $204.4 million, ahead of estimates of $195.13 million. Yet, even here, it was a double-edged sword, as that revenue figure was down over 78% against the same time last year.

Everything Coming Up Sour

Guidance proved no help, as SolarEdge looked for earnings between $250 million and $280 million. Analysts looked for $306.9 million, guaranteeing a miss in the next quarter, barring a significant restatement. And it got worse from there, as Northland Capital cut SolarEdge from Outperform to Market Perform, citing a huge cash burn rate and a lot of inventory sitting idle.

Deutsche Bank’s Corrine Blanchard kept a Hold rating in place but cut the price target down from $75 to $55, citing a slower recovery than expected. With the economy still struggling under inflation and soaring interest rates, demand for household solar parts isn’t likely to be brisk any time soon.

Is SolarEdge a Good Stock to Buy?

Turning to Wall Street, analysts have a Hold consensus rating on SEDG stock based on six Buys, 16 Holds, and three Sells assigned in the past three months, as indicated by the graphic below. After an 81.81% loss in its share price over the past year, the average SEDG price target of $80.67 per share implies 52.64% upside potential.

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