SolarEdge Technologies (NASDAQ: NASDAQ:SEDG) saw its price target significantly reduced by GLJ Research, setting a new low expectation for the solar company's shares.
The firm's analyst has revised the target to $3.90 from the previous $33.46 while keeping a Sell rating on the stock. This adjustment positions GLJ Research's estimate substantially below the consensus projections for SolarEdge's average selling prices (ASPs) in 2025 and 2026.
The rationale behind the new price target is based on a conservative valuation metric. GLJ Research applies a 25.0x EV/EBITDA multiple to its forecast for SolarEdge's fiscal year 2028 EBITDA, which it estimates at $9.3 million.
The figure starkly contrasts with the consensus EBITDA estimate of $373.8 million for the same period. The firm's analyst suggests that the market has not fully recognized the potential for a severe downturn in the solar industry, which historically has led to significant setbacks for companies within the sector.
SolarEdge's stock price is facing an 80.9% downside from Monday's closing price if GLJ Research's predictions hold true. This latest assessment adds a cautious perspective to SolarEdge's financial outlook, contrasting with more optimistic views from other analysts in the industry.
In other recent news, SolarEdge Technologies continues to navigate a complex market environment. The company reported second-quarter revenues of approximately $265 million and has set a revenue target of $550 million for the second quarter of 2025.
Morgan Stanley (NYSE:MS) has adjusted its financial model for SolarEdge, reducing the price target to $23.00 due to slower expected revenue growth and narrower margins. This is in line with the company's inventory strategy and anticipation of stable revenue and gross margins from the third quarter of 2024 through the first quarter of 2025.
SolarEdge's management structure has undergone significant changes, with former CEO Zvi Lando stepping down and ex-CFO Ronen Faier stepping in as interim CEO. Ariel Porat, previously Senior VP of Finance, has assumed the CFO role. Despite these changes, SolarEdge is expected to navigate through the market challenges and meet increasing demand.
Several analysts have provided their insights on SolarEdge's performance. Mizuho Securities lowered their price target for SolarEdge from $40 to $35 due to concerns over margin recovery and inventory levels. Jefferies downgraded the stock from Hold to Underperform, citing a subdued outlook in Europe and strong competition. Truist Securities maintained a Hold rating on SolarEdge, adjusting their 2024 and 2025 revenue estimates to $1.02 billion and $1.67 billion respectively.
InvestingPro Insights
Recent data from InvestingPro aligns with GLJ Research's bearish outlook on SolarEdge Technologies (NASDAQ:SEDG). The company's market capitalization has shrunk to $1.16 billion, reflecting the significant stock price decline over the past year. InvestingPro data shows a staggering 83.53% drop in the stock's price over the last 12 months, with a 69.5% decline in just the past six months.
SolarEdge's financial health appears precarious, with InvestingPro Tips highlighting that the company is "quickly burning through cash" and "not profitable over the last twelve months." This is corroborated by the negative P/E ratio of -2.64 for the last twelve months as of Q2 2024. The company's revenue growth has also taken a hit, with a 58.74% decline in the last twelve months.
Despite these challenges, InvestingPro Tips note that SolarEdge is "trading at a low Price / Book multiple" of 0.55, which could interest value investors. However, this should be weighed against the company's weak gross profit margins and the expectation of a sales decline in the current year.
For investors seeking a more comprehensive analysis, InvestingPro offers 15 additional tips for SolarEdge, providing a deeper understanding of the company's financial position and market challenges.
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