Jeff Osborne, an analyst from TD Cowen, maintained the Hold rating on SolarEdge Technologies (SEDG – Research Report). The associated price target was raised to $18.00.
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Jeff Osborne has given his Hold rating due to a combination of factors that reflect both positive developments and ongoing uncertainties for SolarEdge Technologies. The company has shown progress in its financial turnaround, reporting positive free cash flow (FCF) ahead of schedule in the fourth quarter of 2024 and providing a positive FCF outlook for 2025. This has led to a revised price target of $18, up from $11, indicating improved financial stability. Additionally, the gross margin guidance for the first quarter of 2025 exceeded expectations, and European channel inventory is anticipated to normalize by mid-2025.
However, challenges remain, particularly concerning the lack of transparency regarding the impact of the Inflation Reduction Act (IRA) and safe harbor provisions. This lack of disclosure raises concerns that larger installers may be capturing a significant portion of IRA credits, and there is disappointment over the limited transparency compared to peers. Furthermore, there is less clarity on the company’s cost structure and long-term margin potential, compounded by an expected decline in the European market in 2025. These mixed signals justify the Hold rating as investors weigh the positive financial strides against unresolved issues.