What Happened?
Shares of solar power systems company SolarEdge (NASDAQ:SEDG) fell 7.8% in the morning session after analysts at JPMorgan downgraded the stock. The investment bank lowered its rating on the solar technology company to "Neutral" from a previous "Overweight" rating. JPMorgan cited the stock's significant outperformance since May as the primary reason for the downgrade, with shares having rallied substantially more than the average for stocks in its coverage universe. While the bank acknowledged encouraging initial progress from SolarEdge's new management team on efficiency and product rationalization, it noted that it is still early in the process. Despite the downgrade, JPMorgan did raise its price target on the stock to $23 from $18, reflecting higher future estimates and an increased valuation multiple.
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What Is The Market Telling Us
SolarEdge’s shares are extremely volatile and have had 95 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 2 days ago when the stock gained 4.3% on the news that analysts at Barclays upgraded the stock and more than doubled their price target on the stock. The investment bank lifted its rating on the solar energy technology firm to "Equal-Weight" from a previous "Underweight" status. In a significant show of increased confidence, Barclays analyst Christine Cho also raised the price target for SolarEdge to $29 from $12, a 141% increase. This type of rating change suggests the analyst's outlook on the company has improved significantly. The upgrade is reportedly tied to expectations of a revenue turnaround after a prolonged period of declines, with Barclays forecasting substantial annual top-line growth for 2025 and 2026. This optimism is driven by the normalization of inventory in European sales channels and anticipated market share gains in both the U.S. and Europe.
SolarEdge is up 67.8% since the beginning of the year, but at $24.83 per share, it is still trading 17.8% below its 52-week high of $30.20 from July 2024. Investors who bought $1,000 worth of SolarEdge’s shares 5 years ago would now be looking at an investment worth $150.71.
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