BofA Upgrades SolarEdge Following Recent Sell-Off

Shares of SolarEdge Technologies Inc SEDG underperformed significantly after the company’s first-quarter update, based on investor concerns around the impact of chip shortages persisting into 2022, according to BofA Securities.

The SolarEdge Technologies Analyst: Aric Li upgraded the rating for SolarEdge Technologies from Neutral to Buy, while reducing the price target from $306 to $276.

The SolarEdge Technologies Thesis: The dramatic decline in the company’s stock on supply chain concerns appears overdone, Li said in the upgrade note.

“While we acknowledge investor worries around negative earnings revision risk on the back of potential extended supply impact into ’22, this is ultimately a transitory overhang,” he added.

“Against a positive long-term outlook and clearly robust demand backdrop, we view the latest underperformance as presenting a buying opportunity,” the analyst wrote. He further mentioned that once the supply issues ease, both SolarEdge Technologies and Enphase Energy Inc ENPH will be able to “deliver volumes in excess of downstream deployments given a need to replenish tightening channel inventory (and available manufacturing capacity to do so)” and there could be “significant upward revision” of growth estimates into 2022.

SEDG Price Action: Shares of SolarEdge Technologies had declined by 2.96% to $213.89 at the time of publication Monday afternoon. 

(Photo: SolarEdge)