SolarEdge Q3 Results Miss Expectations; Analysts Warn Of Cash Flow Challenges And Need For Cost Cuts

SolarEdge Technologies, Inc. SEDG shares are trading relatively flat on Thursday.

Yesterday, the company reported third-quarter results, with revenues of $260.9 million, down 2% from $265.4 million in the prior quarter and down 64% from $725.3 million in the same quarter last year.

Revenues from the solar segment were $247.5 million, down 63% from $676.9 million in the same quarter last year.

Here are the analysts’ takes on the earnings results:

Piper Sandler analyst Kashy Harrison downgraded the stock to Underweight from Neutral, lowering the price forecast to $9 from $17.

The analyst sees cash flow challenges ahead due to normal DSOs/DPOs, weak sales, rising U.S. manufacturing costs, European issues, and the Tesla threat.

The analyst suggests a capital raise and major cost cuts are necessary for survival. Harrison widens the FY24 loss estimate per share to $(21.08) from $(7.20).

Truist Securities analyst Jordan Levy reiterated the Hold rating on the stock, with an unchanged price forecast of $20.

According to the analyst, the topline miss is primarily due to continued weakness in Europe, where MW volumes fell over 30%, while North American volumes rose by a similar percentage.

Further, topline and the gross margin guidance for the fourth quarter fell short of Street estimates, while the Opex guidance was slightly below the Street estimates.

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Roth MKM analyst Philip Shen reiterated the Neutral rating on the stock, loweing the price forecast to $12 from $20.

The largest third-quarter writedowns were for excess and obsolete inventory, as the company no longer expects to sell it due to reduced demand in the EU, Shen notes.

The analyst writes that the company aims to return to profitability by focusing on financial stability, regaining market share, and refocusing on core businesses.

It is also reducing costs, streamlining operations in profitable markets, and investing in technology for future growth, Shen notes.

KeyBanc Capital Markets analyst Sophie Karp noted that the company is banking on strong demand for U.S.-made products, alongside new offerings and software, to fuel growth in the next industry cycle.

However, the ongoing demand slump, coupled with recent election developments, is likely to dampen investor interest for now, the analyst writes. The analyst rates SEDG shares Sector Weight.

Price Action: SEDG shares are trading lower by 1.41% to $14.47 at last check Thursday.

Image via Pixabay

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