On Wednesday, Morgan Stanley (NYSE:MS) downgraded SolarEdge Technologies stock, moving from Equalweight to Underweight, and slashed the price target to $10 from the previous $18. The decision reflects the firm’s concerns over declining end-market demand, potential negative impacts on earnings due to tariffs, and increased vulnerability to potential changes in the Inflation Reduction Act (IRA). The downgrade comes as the company faces severe headwinds, with revenue declining nearly 70% and a concerning gross profit margin of -92.8% in the last twelve months.
SolarEdge Technologies, which trades on (NASDAQ:SEDG), faces challenges that include a tight liquidity situation and an upcoming debt maturity. Morgan Stanley emphasized the necessity for near-perfect execution to navigate these issues, which they consider a significant risk in the current market conditions. According to InvestingPro analysis, while the company maintains a current ratio of 1.95, indicating sufficient liquid assets to meet short-term obligations, it has been quickly burning through cash reserves.
The new price target set by Morgan Stanley is based on a discounted cash flow (DCF) analysis. The target suggests a valuation of 0.5 times SolarEdge’s projected 2026 sales, a decrease from the previous multiple of 0.6. This revision takes into account the various headwinds that the company may face in the near future.
The firm’s assessment points to a cautious stance on SolarEdge’s ability to manage its financial obligations and operational performance amidst market and regulatory uncertainties. With the updated price target and rating, Morgan Stanley signals a bearish outlook for the stock, based on the analysis of the company’s financial health and industry conditions.
In other recent news, SolarEdge Technologies has experienced several noteworthy developments. Jefferies has revised its price target for SolarEdge, reducing it to $9.00 due to concerns about tariffs impacting the company’s gross margins, which are estimated to be below consensus. The firm maintains an Underperform rating, highlighting the potential challenges SolarEdge may face in the current fiscal quarter. Meanwhile, Truist Securities has maintained its Hold rating on SolarEdge with an $18.00 price target following the appointment of Asaf Alperovitz as the new Chief Financial Officer, succeeding Ariel Porat. The management change is seen as part of a broader effort to stabilize operations and regain market positioning, especially in the European Union.
Additionally, SolarEdge has adjusted its Board of Directors’ size following the resignations of directors Marcel Gani and Dirk Hoke. The board will reduce from ten to eight members after the 2025 Annual Meeting. In a strategic collaboration, SolarEdge has partnered with Enstall and other firms to streamline the process for IRS Domestic Content bonus credit compliance and tax credit monetization, aiming to simplify due diligence for potential buyers of Investment Tax Credits. These recent changes and partnerships reflect SolarEdge’s ongoing efforts to navigate the evolving energy landscape and enhance its competitive edge.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.