SolarEdge Technologies Inc SEDG shares have fallen 83% year-to-date, and 10% this week alone, with analysts at JPMorgan lowering their estimates following Enphase Energy Inc’s ENPG disappointing third quarter 2024 results.
What To Know: Analyst Mark Strouse revised the price target for SolarEdge down from $35 to $29, maintaining an Overweight rating but noting challenges tied to weaker-than-expected European demand for solar and storage.
Given that 60-65% of SolarEdge's sales are from Europe, and Enphase reported a 34% drop in European sell-through, the read-through for SolarEdge is concerning.
Strouse also projects that SolarEdge could burn approximately $173 million in cash between the third quarter of 2024 and the first quarter of 2025, exacerbating worries about its liquidity.
While the company has $810 million in cash and securities as of the second quarter of 2024 and around $100 million in IRA 45X credits to monetize, concerns about cash generation and liquidity could remain a drag on the stock until there is better visibility.
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Additionally, SolarEdge faces potential headwinds from its convertible debt, with $348 million due by September 2025.
What Else: Despite these challenges, SolarEdge’s differentiated technology, particularly its power optimizers and PV inverters, continues to position it as a leader in the U.S. solar rooftop market.
Strouse sees potential for long-term growth driven by increased penetration in the global solar market and expansion into new verticals.
However, the stock may stay under pressure until the European market stabilizes and cash flow improves. SolarEdge's third-quarter earnings report, scheduled for November 6, will provide more clarity on the company's outlook.
How To Buy SEDG Stock
By now you're likely curious about how to participate in the market for SolarEdge Technologies – be it to purchase shares, or even attempt to bet against the company.
Buying shares is typically done through a brokerage account. You can find a list of possible trading platforms here. Many will allow you to buy ‘fractional shares,' which allows you to own portions of stock without buying an entire share. For example, some stock, like Berkshire Hathaway, can cost thousands of dollars to own just one share. However, if you only want to invest a fraction of that, brokerages will allow you to do so.
In the the case of SolarEdge Technologies, which is trading at $15.16 as of publishing time, $100 would buy you 6.6 shares of stock.
If you're looking to bet against a company, the process is more complex. You'll need access to an options trading platform, or a broker who will allow you to ‘go short' a share of stock by lending you the shares to sell. The process of shorting a stock can be found at this resource. Otherwise, if your broker allows you to trade options, you can either buy a put option, or sell a call option at a strike price above where shares are currently trading – either way it allows you to profit off of the share price decline.
According to data from Benzinga Pro, SEDG has a 52-week high of $103.15 and a 52-week low of $14.89.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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