SolarEdge Technologies Inc SEDG saw its shares fall Thursday afternoon by 5.47% to $17.96, amid a sector-wide decline in clean energy stocks, after a price target reduction for First Solar FSLR sparked broader concerns about the solar energy industry.
What Happened: Thursday’s decline began after Jefferies analyst Dushyant Ailani cut the price target for First Solar from $271 to $266, marking the second reduction in a week following B of A Securities' move to lower its target from $343 to $321 earlier.
Although First Solar's downgrade was specific to the company's valuation, the ripple effects quickly spread across the solar sector, including SolarEdge, a key player in solar inverters and power optimization technologies.
While SolarEdge doesn't compete directly with First Solar in solar panel manufacturing, the fortunes of both companies are closely tied to overall demand in the solar market.
A slowdown in growth or pricing pressure in the solar panel space could have downstream effects on SolarEdge's business, which relies on robust panel installations to fuel demand for its products.
What Else: As one of the world's largest providers of inverter and energy management solutions, SolarEdge plays a critical role in enabling the efficient conversion of solar energy to usable electricity.
When negative signals emerge from the solar industry, such as the lowered price target for First Solar, it raises concerns about demand for SolarEdge's products, especially as it faces growing competition from domestic and international players.
If panel prices fall or installation volumes slow, SolarEdge could experience reduced demand for its power conversion and monitoring systems, impacting future growth prospects.
Read Also: How To Watch Tesla Robotaxi Day Live: Elon Musk’s Autonomous Vehicle Event Is Here
What To Watch For: In addition to industry-specific factors, broader economic concerns have cast a shadow over SolarEdge and the renewable energy sector. Thursday's Consumer Price Index (CPI) report for September revealed higher-than-expected inflation, alongside a surprise uptick in weekly jobless claims.
This combination of data has reignited fears that the Federal Reserve may need to maintain elevated interest rates for a longer period. For SolarEdge, whose business model depends on large-scale, capital-intensive solar installations, the prospect of sustained higher interest rates could dampen demand as financing costs rise.
This would make it more expensive for customers, including homeowners and businesses, to fund solar installations, which are often partially financed through loans or other credit instruments.
How To Buy SEDG Stock
Besides going to a brokerage platform to purchase a share – or fractional share – of stock, you can also gain access to shares either by buying an exchange traded fund (ETF) that holds the stock itself, or by allocating yourself to a strategy in your 401(k) that would seek to acquire shares in a mutual fund or other instrument.
For example, in SolarEdge Technologies’ case, it is in the Information Technology sector. An ETF will likely hold shares in many liquid and large companies that help track that sector, allowing an investor to gain exposure to the trends within that segment.
According to data from Benzinga Pro, SEDG has a 52-week high of $130.38 and a 52-week low of $17.12.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Comments
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.
