SolarEdge Shares Fall as Jefferies Cuts to Underperform After RE+ Event By Investing.com

Shares of SolarEdge (NASDAQ: ) fell more than 5% in premarket trading Tuesday after analysts at Jefferies downgraded the stock to Underperform from Hold, citing negative takeaways from the recent RE+ clean energy event. The investment bank also cut its price target on the stock from $27 to $17.

“We initiated SEDG with a Hold with the hope of gaining more confidence from RE+. Unfortunately, this did not work out,” the analysts note.

“What we heard was a longer-than-expected outlook in Europe, and while the U.S. is recovering, there is still stiff competition.”

Based on the discussion at RE+, Jefferies has further cut its average selling price (ASP) estimates and are now 13% to 15% below consensus for 2025 and 2026, with an expected 14% year-over-year decline per year.

The current consensus expects ASPs to decline by low single digits, while management had previously indicated high single digit to low double digit declines. Given the significant premium that SEDG inverters are trading at compared to their Chinese counterparts in Europe, Jefferies expects the decline in ASP to be more severe, potentially exceeding a 10% drop.

While there may be an advantage in US ASPs due to domestic content, Jefferies expects this to be largely offset by other factors.

As of the second quarter, Europe accounted for 37% of SolarEdge’s solar sales, down from 64% in 2023.

Looking ahead, the investment bank anticipates Europe contributing to the 30% trend, while still remaining a significant part of the company’s business.

Analysts expect SolarEdge to remain EBITDA negative in 2025, projecting a loss of $144 million, compared to the consensus estimate of a gain of $23 million.

In talks during the RE+ event, interim CEO Zvi Lando mentioned targeting positive EBITDA by the second quarter of 2025. However, Jefferies remains skeptical and believes the market is too optimistic about the second half of 2025. 2025. For 2026, Jefferies estimates EBITDA at $107 million. , which is about 50% below current consensus expectations.

“Until SEDG is EBITDA positive, it will need to carefully manage its cash burn as it seeks to monetize its $1.5 billion in stock. Our analysis of SEDG app download data indicates a subdued recovery in the US despite steady permit data,” the analysts continued.