GLJ Research Slaps Sell Rating On Solaredge Ahead Of Q3 Earnings

Solaredge Technologies Inc SEDG seems to be headed for a disappointing performance in the back half of 2019 and through 2020, due to which the stock is likely to tumble, according to GLJ Research.

The Analyst

GLJ Research’s Gordon Johnson initiated coverage of Solaredge Technologies with a Sell rating and a price target of $34.

The Thesis

There has been heavy insider selling of Solaredge Technologies’ shares, with $25 million worth of shares being sold between August and October, which is indicative of insiders exiting “ahead of pending negative news,” Johnson said in the initiation note.

The analyst mentioned three main challenges that the company faces. Firstly, Tigo Energy’s plug-and-play MLPE (module-level power electronics) solution, has been gaining significant traction after its approval in the US. This product offers a low-cost rapid shutdown functionality and optimization technology to American inverter manufacturers.

Johnson also mentioned that Huawei has swiftly gained market share in the US as well as the Europe, the Middle East and Africa region. The analyst added that Solaredge Technologies already had around six months of channel inventory.

All these factors may result in the company delivering a disappointing performance in the second half of this year and in 2020. Johnson further noted that the price target of $34 represented a 57% downturn from the stock’s closing price on Monday.

Price Action

Shares of Solaredge Technologies were down 2.73% at $81.00 at the time of publishing on Wednesday.