Citi downgrade SolarEdge with shares ‘in the penalty box’

Citi downgraded SolarEdge Technologies to Neutral from Buy with a price target of $77, down from $187. The firm expected Q3 to be a “rough quarter” but says the situation for SolarEdge “is much worse than we anticipated.” The company’s gross margin will be persistently low over the near to medium term given a more severe need for inventory reduction and as fixed costs are meaningfully higher than expected, the analyst tells investors in a research note. Citi expects SolarEdge to face demand and margin headwinds through late 2024 and for the stock to be range bound and “in the penalty box until then.” Product pricing and competition has made the outlook in the near to medium term even more uncertain, says the firm. As such, it awaits a better entry point into the name.