From Financial Modeling Prep: 2024-10-21 13:53:00

SolarEdge Technologies (NASDAQ:SEDG) saw a 4% drop in shares after TD Cowen downgraded the company to Hold from Buy. The downgrade was due to challenges in European markets, which are expected to delay the company’s recovery in volume, margins, and free cash flow. TD Cowen also slashed SolarEdge’s price target to $16.

SolarEdge has been hit hard by declining solar installations in Germany, a key market accounting for 23% of the company’s revenue in 2023. With a 29% drop in residential solar installations in Germany in the third quarter of 2024, SolarEdge faces significant obstacles. Elevated inventory levels in Europe are also expected to impact performance.

Chinese competitors are putting pressure on SolarEdge with increased pricing competition in the European market. European distributors are heavily reliant on Chinese-manufactured inverters, with 40-60% of inventory consisting of Chinese products. This exacerbates SolarEdge’s pricing challenges in the region.

TD Cowen anticipates a delayed recovery in revenue and margins for SolarEdge, pushing the expected rebound to the fourth quarter of 2025. Previous estimates of a turnaround by the second quarter have been revised. However, the company is still expected to return to positive free cash flow in the latter half of 2025.



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