Goldman Sachs Upgrades SolarEdge Technologies Inc
Goldman Sachs upgraded SolarEdge Technologies Inc (NASDAQ:SEDG) from sell to buy, citing early signs of recovery and the company’s restructuring strategy aimed at stabilizing its balance sheet.
Price Target Increase
The brokerage raised its 12-month price target from $10 to $19, indicating a nearly 35% upside.
Addressing Investor Fears
Goldman noted that concerns about SolarEdge's liquidity and its ability to handle a $350 million debt due in 2025 are overstated. The company's ongoing cost-cutting measures, including reductions in headcount and operational efficiencies, should alleviate free cash flow concerns. An improved product mix is also expected to boost margins and earnings in the near term.
Growth in Solar Market
The brokerage highlighted broader growth trends in the solar market as beneficial for SolarEdge’s recovery. Goldman forecasts a return to growth in residential solar installations by 2025, especially in key markets like the U.S. and Europe. Recovery in utility-scale solar installations and increasing power demand could further enhance sector sentiment.
Future Outlook
Despite near-term challenges such as policy uncertainty and competition, Goldman views SolarEdge’s restructuring efforts as a crucial turning point. The firm anticipates improved earnings momentum by late 2025, with sharper acceleration in 2026 as cost efficiencies come into play and demand stabilizes. They also find current valuations attractive, suggesting significant upside if execution improves.
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