SolarEdge Technologies, Inc. (SEDG) on Q2 2021 Results - Earnings Call Transcript
Erica Mannion: Good afternoon. Thank you for joining us to discuss SolarEdge’s operating results for the Second Quarter Ended June 30, 2021, as well as the Company’s outlook for the third quarter of 2021. With me today are Zvi Lando, Chief Executive Officer; and Ronen Faier, Chief Financial Officer. Zvi will begin with a brief review of the results for the second quarter ended June 30, 2021. Ronen will review the financial results for the second quarter followed by the company's outlook for the third quarter of 2021. We will then open the call for questions. Zvi Lando: Thank you, Erica. Good afternoon. And thank you all for joining us on our conference call. In my remarks today, I'll discuss the trends and momentum in our different business segments, update on new product releases in particular, the introduction of our residential battery and at the end, discuss how we are navigating the much talked about global supply and logistics challenges. We are happy to report record revenues in both our solar and non-solar segments for the second quarter of 2021. Our total revenues this quarter were $480 million consisting of a record $431 million from our solar business and a record $49 million of revenue from our non-solar business. Overall, this quarter, we shipped five million power optimizers and approximately 180,000 inverters. The record solar revenues reflect strong demand for our solar products across all segments and geographies. In particular, we saw this quarter record revenues in Europe led by record revenues in the Netherlands, Italy, and Poland, as well as record revenues in what we call rest of the world, representing all regions outside of North America and Europe. In the U.S. this was the third consecutive quarter of growth in delivery of residential products. Ronen Faier: Thank you, Zvi. And good afternoon, everyone. This financial review includes a GAAP and a non-GAAP discussion. Full reconciliation of the pro forma to GAAP results discussed on this call is available on our website and in the press release issued today. Total revenues for the second quarter were $480.1 million, an 18% increase compared to $405.5 million last quarter and a 45% increase, compared to $331.9 million for the same quarter last year. Revenues from the solar segment were $431.5 million, a 15% increase compared to $376.4 million last quarter. The quarter’s revenue do not include residential battery shipments, which we initiated at the end of the quarter. U.S. solar revenues this quarter were $175.1 million and represented 40.6% of our solar revenues. Solar revenues from Europe were a record $200.7 million or 46.5% of our revenues and the rest of the world solar revenues were a record $55.7 million or 12.9% of our total solar revenues. On a megawatt basis, we shipped 580 megawatts to the United States, 745 megawatts to Europe and 319 megawatts to the rest of the world. 43% of this amount were commercial products and the remaining 57% were residential. This quarter, our top 10 solar customers represented 61.4% of our solar revenues. Two U.S. customers accounted for more than 10% of our solar revenues. Blended ASP increased by approximately 20.5% compared to the last quarter, since the ratio of optimizers to inverters was higher than usual due to temporary manufacturing and logistic optimization. In general, the pricing environment remained stable this quarter, while for the third quarter, we notified our customers of a modest price increase to support increased freight expenses. Operator: Thank you. We'll take our first question from Mark Strouse with J.P. Morgan. Please go ahead. Mark Strouse: Yes, thank you very much for taking our questions. Just a high-level question, I wanted to ask about the competitive environment. It sounds like from your commentary that the pricing is relatively stable but what are you seeing as far as market share? And can you kind of broadly speak, not just within smart inverters, but against your traditional string inverter based competitors as well, just focusing on the solar side, if you can. Thank you. Zvi Lando: Yes. Hey Mark, the tracking on a quarterly basis, the market share in this industry is tough. When there were indications that we are losing markets here, we were cautious with those type of indications. And similarly, when it seems as if we are gaining market share, I don't think we can say with confidence that that we have a hard evidence to support that. The market is growing in most geographies as under the current circumstances and when we look at the markets, we believe that we're growing at the faster pace in many of the markets. Our focus in this regard is really about our customers. The installers that installed our equipment, we believe that if they have equipment to install, especially in this environment, chances are that they're gaining share in their respective regions or locations. And if they're gaining share, it translates to us gaining share. So that's really the dynamic we're focusing on, is to make sure that our loyal installers have the products that they need to serve the growing demand and we believe that it is contributing to positive momentum. Mark Strouse: Okay, great and then just a quick follow-up. As far as the 3Q gross margin outlook goes, can you just tell us kind of what your assumptions are as far as transportation, logistics costs? Do you assume status-quo? Do you think things get worse, better? It would just kind of what's baked in there? Ronen Faier: So what's actually baked is a combination of two elements. The first one is the freight expenses, which stabilized at a higher level. And right now, at least we do not see a lot of ease in this area, although we do not see by the way increase in these costs, but when it comes to the cost themselves, it's also a question of whether we need to expedite some of the shipments due to the fact that again, customers will need more goods in order to install. And we will decide to use air shipments instead of ocean freight in order to be there on time. So I think that it's not coming from the price, but actually from our decision about how much to expedite. The second area, which will affect and I think that most of the – if you take the midpoint now, when you compare it to the gross margin level of the second quarter, which is of course obviously the Q3 is lower. A lot of it is also related from the fact that Zvi mentioned when the Vietnam manufacturing facility is working at reduced capacity due to the government enforced lockdown there, we are expanding our manufacturing in China. We're lucky to have manufacturing areas both in Vietnam, China, Hungary and Israel, and therefore we can maneuver between them. But when you are manufacturing more in China that means that you're paying more tariffs when you enter into the United States. And a lot of the decrease that you see in the expectation of gross margin for the next quarter is actually coming from there. It's not necessarily just from the shipment. Operator: Thank you. We'll take our next question from Stephen Byrd with Morgan Stanley. Stephen Byrd: Hey, good afternoon. Thanks so much for taking my questions. You had mentioned talking with customers about price increases, and I'm just curious in terms of just your views on the impacts there in terms of customer willingness to pay that sort of contractually have that as dealt with, how do you sort of see that in terms of the impacts to your bottom line? Ronen Faier: The impact is not dramatic as the increase is in lower-single digit levels. And it varies depending on the geography as is associated with the additional logistic costs that are specific to that geography. So in that regard, that makes the conversation very constructive and transparent. We shared with the customers, the actual increases and we are not shifting all of the additional expense to them, but we are somehow splitting it, splitting between us and the customers understand that as things return to normal, so will this additional expense, so we have a history of dealing with our customers in a transparent way, and I think it gives us credibility when we come to them with this topic and the dynamic has been quite smooth so far. Stephen Byrd: That's really helpful. And then just shifting to storage, exciting developments in terms of your growth in storage, you mentioned that supply agreement, is it possible to give us a sense for the volume of capacity total that you would have in 2022? I mean, we are quite bullish about the growth globally of energy storage. We see lots of demands around the world. I am just curious, sort of given everything you're seeing on the positive side in terms of supply agreements, but also on the negative in terms of just all the supply chain constraints. Can you speak at a high level to sort of how you think about your overall capacity in 2022 to deliver product to customers? Zvi Lando: So in this case, actually the capacity is going to be more dependent on the supply and the sales, and the pace of their arrival rather than our own capabilities, because the battery that we've developed, these are our own battery, we developed it from cells and we of course developed all of the mechanical and the packing, and BMS and all of the other systems around it. But that means that most of the work that we're doing is actually the assembly based on the cells. As we mentioned in the call, first of all, we will have the agreement with Samsung that will provide us with approximately 250 megawatt per quarter give or take, because of course there are always a little bit of a shipment changes or something like this, but in general, it should be evening across the year. And as much as we can get sales at the time that we can get sales, we can basically turn them into batteries and ship them to the field. Operator: Thank you. We'll take our next questions – I apologize. We'll take our next question from Philip Shen with Roth Capital Partners. Philip Shen: Hi everyone. Thank you for taking my questions. Just a follow-up there on the storage topic, I think in the prior call, you were targeting a $100 million to $150 million of revenue in 2021 for storage and $300 million in 2022. Are you able to re reaffirm those targets? I know you gave I think a 25 to 30 megawatt hour target for Q3, but was wondering if you could help translate that to the prior targets? Zvi Lando: Sure. So the answer – the question follows the previous one, the answer actually follows the previous question as well, answer as well, because our ability to supply is basically dependent on the supply of cells from Samsung in this case, and our ability to turn them into cells. What we see this year is that due to some of the logistic challenges, we are getting sales a little bit late into the year, and therefore it's basically dependent on their arrival time and our processing time in order, not only to manufacturer them, but also to ship them using ocean freight into the U.S. and in Europe, it's a little bit more easier. So here I'm not sure if we will be able to meet all of this capacity this year, however whatever capacity we are not going to utilize this year, we're going to basically turn into the next year. So if we're missing something, let's say in Q4, it will simply spill over into Q1. And since the demand, at least right now seems to be higher than we can manufacture. I believe that it's just a matter of splitting it between the quarters. One thing to mention, though of course, is also the fact that when we talk about the next year is that to this supply agreement we will have our own Sella 2 cells that are supposed to join at the second half of the year. And again, if the demand is there, we will know how to turn those into revenues, which of course can get us to a higher number. Operator: Thank you. We'll take our next question from Colin Rusch from Oppenheimer. Colin Rusch: Thanks so much guys. Given the ratio of inverters to optimizers that you're reporting, can you talk a little bit about the growth in the commercial sector and the size of the systems that you guys are expecting to drive a lot of the growth here in the second half? Zvi Lando: So indeed the change in the ratio is also because of growth in commercial and growth in large projects and commercial and the availability of a higher power inverter, all of which are translating to more optimizers per inverter, which is part of the capability of a DC architecture, like the one that we have. And actually in some cases specifically to this quarter because people wanted to be 120 kilowatts, the new inverter, and we weren't yet at high volume, they still took the optimizers early, so that they begin installing them in the field, because that takes a fair amount of time. And it's a task that is usually done first, and then the inverters can follow later, so that also contributed to the skewed ratio this quarter, compared to previous ones. But overall, as I discussed in the prepared remarks, we are – the number of large projects that we are involved in is growing nicely in all geographies, not only in the U.S. and the Europe, where we were traditionally strong in commercial and Australia, of course, but also in Asia-Pacific and places like Taiwan, Thailand beginning in Korea as well. So the momentum is positive and definitely we are finding ourselves in larger and larger ground mount installations around the world. Operator: Thank you. We'll take our next question from Brian Lee with Goldman Sachs. Brian Lee: Hey, guys. Thanks for taking the questions. I had a couple here. First, Ronen, on the one gigawatt of cells from Samsung SDI in 2022, and I know that's not completely linear, but can you give us a sense of how much of that capacity you're expecting to be dedicated to the resi battery storage product versus other battery products in the portfolio? And then on the mix question, I just had a follow-up. If we look at sort of the price per watt metrics, it seems like it's up a decent amount in 2Q versus 1Q. I know that has some mixed element attached to it. But given some of the moving parts here with respect to mix and then also the modest price increase you guys have announced here for 3Q. I guess how should we think about volume trends because you've seen sort of flattish volumes on a megawatt basis? Does that sort of revert back to a more normal sequential increase into the third quarter? Or are we going to continue to see sort of more muted volume trends on that megawatt basis, just given the mix issue? I just would love to understand that a little bit better for modeling. Thanks guys. Ronen Faier: Okay. So I'll answer one-by-one, and if I forget anything, please feel free to remind me. So with regards to the cells coming from our supply agreement, actually, all of them are going to go into our residential batteries. That means that, of course, if there is more demand than this amount, we can utilize once the Sella 2 factory starts to work, the Kokam cells for this business. And if not, there are other independent businesses that Kokam can do with those cells. But at least the Samsung cells are all designed towards our residential battery and we hope that they will be consumed at these levels because it's a relatively large capacity compared to what comes today to the United States. When it comes to the volumes, actually, again, I think that this quarter, the ASP, as we said and we noted was a little bit, I would say, artificial because when we're calculating the ASP per watt of course, it's based on the nameplate capacity of the inverters. And when we sell more optimizers, the dollars come on the revenue, but the capacity does not go in. And in general, I think that the more commercial you will see, you see more a ratio of optimizers to inverters. We do expect to see volumes growing in both of them. But since you can see that at least in the last two, three quarters, even though we are improving in commercial, the ratio was lower than in the past, then the ratio of higher amount of optimizers to inverters should be maintained in a sense. The one thing to say, though, is that the fact that as Zvi mentioned in the previous answer, since some of this is actually related to new inverters that are now just produced. We do have a little bit of shifting from, let's say, Q3 into Q2 with the amount of optimizers. So it's kind of a temporary jump in the number of optimizers that will go down in Q3. But in general, the more commercial you see and the more improvement you see there, you will see better ratio of – or higher ratio of optimizers to inverters. And lastly, again, when coming to the price increases, I think that the effect here is, in general, going to be minimal on almost all of the segments due to the fact that they are, first of all, very modest, as we said, low single-digit percentages of increase, and therefore, we do not expect to have major impact on ASP due to these increases. Did I forget anything? Okay. Brian Lee: No. You captured. Ronen Faier: Great. Thank you. Operator: Thank you. We'll take our next question from Maheep Mandloi from Credit Suisse. Maheep Mandloi: Hey, thanks for taking the questions. Ronen, if you could just talk about the one gigawatt battery cell arrangement with Samsung. What's the duration? And is it kind of recurring in nature? And would it support the Sella 2 factory production? Or would Sella 2 kind of replace this arrangement going forward for you guys? Zvi Lando: So as we said and then clarified, it's one-gigawatt hour of cells from Samsung to be supplied more or less linearly over 2022 and all to be used in our residential battery. And a quick calculation will say for a 10-kilowatt hour battery, one-gigawatt hour of cells that translates to 100,000 batteries. This is in addition to the cells that will begin to come out of our factory in the second half of the year. And as I explained, as we do also in our inverter business, we have our own factory that is a very good mechanism to accelerate initial production of new technologies. And we use lithium-ion batteries in multiple segments and businesses. So we expect that Sella 2 will provide us both capacity of cells to meet additional demand on top of the contract that we signed and also the ability to introduce new products and manufacture the initial volume of those new products. So these are two separate sources of cells that are going into similar products in order to give us the flexibility to meet demand and develop new products rapidly. Operator: Thank you. We'll move on to our next question from J.B. Lowe with Citi. J.B. Lowe: Hey Zvi, Ronen, Erica, how are you doing? My question was just a follow-up on some of the storage data you guys gave. When you're going to be selling your new product, is that going to be – are you going to be selling it exclusively with a SolarEdge inverter? Or are you going to be selling it to selling it into houses that maybe have a competitor inverter already? Zvi Lando: So it's a philosophical question that we think about. But in the foreseeable future, the demand for new installation and add on to that, the huge installed base of our own systems that is out there such that I think our focus will be on selling the batteries for new installations with our inverters and adding batteries to already installed SolarEdge systems and less about the ability to attach the battery to non-SolarEdge systems. Operator: Thank you. We'll move on to our next question from Eric Lee with Bank of America. Unidentified Analyst: Hey, thanks for taking the questions. Just on storage with the 25 to 30-megawatt hour expectation for 3Q. Can you talk about the ramp expectations and sequential improvements into 2022, given the 250 megawatt hour availability from Samsung per quarter that you cited. How do you think about the constraining factors for ramping volumes here? Thank you. Zvi Lando: So in general, as we mentioned, I think that since the part of the production that we do is mostly the, I would call it, assembly of the battery cells in the battery. The ramp-up is supposed to be relatively simple as it's not a very, I would call it, a complicated or capital-intensive investment that is needed by our contract manufacturers. And therefore, the ramp is mostly, I would say, determined by the supply of sales rather than our own ability to process them into batteries. I don't think that it's going to be linear because by definition, the quantities that we still have for this year coming prior to the new agreement that will start in the beginning of 2022 are not even getting closer to the 250-megawatt hour that we will be able to provide next year per quarter. And therefore, I would assume that you should see I would say almost linear increase towards the end of the year from where we started. So that means about 25 to 30-megawatt increase in, let's say, the fourth quarter, maybe a little bit more, again, depends on the amount of sales. And then you will see an acceleration in Q1 that will get us up to 250. I do not expect that this will happen immediately in Q1. So I would say a kind of a linear growth of about 25 to 30 megawatts per quarter in Q3 and Q4 of ramp, then an increase that is steeper in Q1 and then somewhere in Q2 – middle of Q2 at least, we should be in a sense, stabilizing at 250-megawatt hour per quarter. Operator: Thank you. We'll hear next from Kashy Harrison from Piper Sandler. Kashy Harrison: Thank you. Good evening. Thanks for taking my questions. So the third quarter guidance implies non-solar gross margin of 10%, which is a significant improvement relative to Q1 and Q2. Can you talk about what's driving the improvement in non-solar gross margins? And then as you think about ways to increase value for shareholders, do you think it might sense for SolarEdge at some point to spin out the mobility business into a publicly traded equity? It seems like the public markets are more willing to reward standalone stocks expose to EVs, then maybe what's implied in your stock price? Thank you. Ronen Faier: Okay. So I'll start from the margin, which is the easiest question here. At least in the margin, the main domain issue here is rent, especially in the e-Mobility area, the fixed assets or the fixed I would call it means of manufacturing that we have are putting away on the gross margin, depends on the amount of vehicles in portraying units that we're delivering. And we started to really deliver substantial amounts in Q1, then of course, we grew in Q2 and we expect to see steady growth towards Q3 and Q4. And that means that over these next quarters, this will actually generate the situation where all of these fixed amounts will be spread over much larger amount of units, of course improving the margins. In addition to this, we also believe that there is a growth that we see in the lithium-ion business of Kokam that is already characterized with a healthy gross margin. And the combination of one – the shrinkage of the negative effect of the e-mobility, plus the increase in the battery that is coming with a very good margins, at least at this stage will help us to get to this, I would call it positive and higher single-digit to low double-digits of gross margins on all of the non-solar. As of splitting the business of the e-mobility at least today we're not looking at the short-term, I would call it optimizations just by the way that the capital markets are working. We truly believe that for the long-term and this was the reason that we acquired the e-mobility division to begin with is that having a company that is basically specializes at energy, smart energy management and energy conversion, and being able to have a one-stop shop coming from the generation of electricity into the, I would call it a storage of electricity up to the utilization, not just by our e-mobility business, but also by our critical power businesses that will grow. This all provides much more value to the shareholders as was one company at least as we see it today. Operator: Thank you. I’ll take our next question from Jeff Osborne for Cowen & Company. Please go ahead. Jeff Osborne: Yes, good afternoon guys. So just two quick ones on the storage side. Can you talk about whether you expect the initial customers to be more Tier 1s selling direct, or would you be selling through distribution is a part, one of the question? Part two is, can you talk about what efforts you're doing or already underway around training and commissioning? Those are two factors that have stunted growth of other new entrance in the space. I'm just curious how you can overcome that. Zvi Lando: Yes. So the answer for the first question like many of the other questions is both. So and we also mentioned that we already are running in parallel both in Europe and the U.S., so it's also direct to some Tier 1 customers and also distribution. And the answer to the second, we didn't want to elaborate on it too much, but we did – we are employing a mechanism of both training and certifying installers prior to enabling them to install a SolarEdge battery and they assist him to monitor and control that, so that the installations are done properly and with high quality. And of course, in the first wave of installations, we will make every effort to have our people participate to the extent possible to give not only theoretical training, but also hands-on and accompany the installers during their first experience with the battery. And this is on the basis of the system that we've been employing for training on the solar or the inverter equipment for years and it's just a bit more deep and a bit more restrictive in the fact that we require to be certified prior to executing an installation. Operator: Thank you. I’ll take our next question from Moses Sutton with Barclays. Moses Sutton: Thanks for taking the questions. Can you confirm on the storage product just to continue on that, it's all fully certified UL and anything else, it's entirely clear to ship widely? Zvi Lando: Yes. So the battery has the required certification to be installed indoor and outdoor in Europe and the U.S. And I think the listings are either up or will be up shortly, I didn't check lately, but the certifications are in that enabled those types of installations. Operator: Thank you. We'll hear next from Joseph Osha with Guggenheim Securities. Joseph Osha: Hi there. I'd like to ask a question not about storage, you had talked previously about how the automotive business might get $120 million in change or so this year, and maybe double next year curious in particular as to whether that rough target still stands for next year? And then to return to some of the questions in margin, that hope that as we get out of next year, that we might be kind of into the low single-digits gross margin. Wondering if you can comment on those expectations. Thank you. Ronen Faier: So, first of all, with regards to the quantity, we mentioned the $100 million to $120 million for this year, we feel comfortable with this. And of course since the – we said that the year was mostly characterized this year with growth, that means that yes, once we stabilize on the higher levels, of course, we can increase this amount in the next year. We need to remember though that, of course, this is also an issue of the orders that Stellantis will have to the car itself because the fact that we can actually manufacture, it doesn't mean that it has customers, we believe that it has an – there are nice customers for this vehicle, but I think that this will be the thing that will determine the most what are going to be the revenues and at least right now, we do not see a problem meeting the numbers. And I forgot Joe, the second part of the question. Joseph Osha: Just looking at gross margin. I think you guys have said that, that business is probably running at a negative gross margin right now. But wondering if you can comment on what the trajectory of that is and whether it might get to sort of gross margin breakeven as we move through next year? Ronen Faier: So the answer is yes, in this case. First of all this is a project that in many senses we inherited when we acquire the e-mobility division. And I would say that it was seeded before we acquired the company and when we came to actually fulfill it, we found that we need to make this product more of automotive grade from quality, reliability, and safety, and therefore added a lot of costs. And in a sense, when we came to this project, the cost – the price was already locked, the cost was the only thing that we needed to increase in order to make it a safe product. And therefore, we're relatively, I would say at low margins, when we go to full capacity in this project. It is a profitable project, though once you go into mass production, it's the levels that Stellantis and we agreed upon, because in general, we do not believe that you should do business where you're losing on every unit that you're shipping. So in a sense, the negative margin today is a kind of a learning curve that we have, it is not going to be an extremely profitable project as a whole as long as we stay with this specific configuration, but at least once we get to the end of the year or starting of next year, when we level at the desired, I would call it level by Stellantis, this should be a positive low single-digit project. Operator: Thank you. And I’ll take a follow-up question from Moses Sutton with Barclays. Moses Sutton: Just a quick follow-up on one of Jeff's questions. How many initial or beta systems have actually been installed for the storage, perhaps in total or in terms of how many installers at least installed once? Zvi Lando: No, it's in the range of 10s, but we're not giving the specific number. Operator: Thank you. And that does conclude today's question-and-answer session. I'd like to turn the conference back over to Mr. Lando for the additional or closing remarks. Zvi Lando: Thank you, and thank you everyone for joining our call. I just want to take this opportunity to thank our customers, employees, and buyers for their support during this period. And while I'm satisfied with our performance and results, I'm even more excited about the opportunities that are ahead of us. So thank you all again and have a good day.SEDG Ratings Summary
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Susquehanna Adjusts SolarEdge Technologies' Price Target
- Biju Perincheril of Susquehanna adjusts the price target for SolarEdge to $56, indicating a potential increase of about 13.2%, with a downgrade of its rating to neutral from positive.
- SolarEdge reports a significant first-quarter loss in 2024, with an adjusted loss per share of $1.90 and a GAAP loss of $2.75 per share.
- Revenue plummeted by 78% year over year to $204.4 million, reflecting ongoing struggles within the solar industry.
On Monday, May 13, 2024, Biju Perincheril of Susquehanna adjusted the price target for SolarEdge Technologies (NASDAQ:SEDG) to $56, suggesting a potential increase of about 13.2% from its current price of $49.47. This new target comes with a downgrade in rating to Neutral from Positive. SolarEdge Technologies, a key player in the solar energy sector, specializes in the development of inverter solutions for solar photovoltaic (PV) systems. The company's recent performance and market position are crucial for investors, especially in the context of the broader solar industry's dynamics.
The solar sector, where SolarEdge operates alongside competitors like Enphase Energy (ENPH), First Solar (FSLR), and Canadian Solar (CSIQ), is experiencing growth, particularly in the residential segment. However, SolarEdge's recent financial outcomes have raised concerns. The company reported a significant first-quarter loss in 2024, with an adjusted loss per share of $1.90, surpassing the Zacks Consensus Estimate of a $1.58 loss. This marks a considerable downturn from the previous year's earnings of $2.90 per share. On a GAAP basis, the loss was even steeper at $2.75 per share, compared to GAAP earnings of $2.35 per share in the same period last year.
Revenue figures further underscore the challenges SolarEdge is facing. The company's revenues plummeted by 78% year-over-year to $204.4 million, albeit slightly beating the Zacks Consensus Estimate by 4.9%. This decline is primarily due to a significant drop in revenues from its solar segment, which fell by 79% to $190.1 million from $908.5 million in the prior-year period. Such financial results reflect the ongoing struggles within the solar industry and have led to a reassessment of SolarEdge's outlook by analysts and investors alike.
The stock performance of SolarEdge also mirrors these financial challenges. The company's shares experienced a decrease, closing at $49.47, which is a decline of approximately 6.08%. This trading session saw the stock fluctuating between a low of $49.12 and a high of $53.67. Over the past year, SEDG's shares have seen a high of $313.55 and a low of $49.12, with a market capitalization of approximately $2.83 billion. This volatility in stock price, coupled with the recent downgrade by Susquehanna, suggests a cautious outlook for SolarEdge within the competitive landscape of the solar energy sector.
SolarEdge Plunges 17% Following Q4 Miss
SolarEdge Technologies (NASDAQ:SEDG) experienced a significant 17% drop in its share price during premarket trading Wednesday. This decline came in the wake of the company's fiscal Q4 results and FQ1 2024 guidance, both of which fell short of analyst expectations. Despite a narrower-than-expected loss of $0.92 per share, its $316.04 million revenue for the quarter missed the $324.2 million forecast.
The company also reported a drastic decrease in non-GAAP gross margin, plummeting from the previous year's 30.2% to 3.3%. Looking ahead, SolarEdge anticipates revenue in the range of $175 million to $215 million for the next quarter, significantly below the $373.44 million forecast, with its solar segment expected to contribute between $160 million and $200 million.
SolarEdge Shares Drop 6% on Job Cut Announcement
SolarEdge Technologies (NASDAQ:SEDG) revealed on Sunday plans to cut its workforce by approximately 16%, affecting around 900 global employees, as part of its cost reduction efforts. Following this announcement, the company's shares increased by 6% intra-day today.
This workforce reduction is in line with several other cost-cutting measures SolarEdge has recently undertaken. These include shutting down manufacturing operations in Mexico, scaling back production capacity in China, and discontinuing its light commercial vehicle e-mobility division.
In November, the company had to revise its revenue forecast for the fourth quarter of 2023 downwards, attributing this to lower demand for its solar inverters. SolarEdge had initially expected Q4/23 revenue to be around $325 million, a significant decrease of 55% from Q3 and a 64% drop from the same period the previous year. However, analysts are now projecting Q4 revenue to be about $371 million, with the company likely to report a loss of $1 per share.
SolarEdge Shares Drop 6% on Job Cut Announcement
SolarEdge Technologies (NASDAQ:SEDG) revealed on Sunday plans to cut its workforce by approximately 16%, affecting around 900 global employees, as part of its cost reduction efforts. Following this announcement, the company's shares increased by 6% intra-day today.
This workforce reduction is in line with several other cost-cutting measures SolarEdge has recently undertaken. These include shutting down manufacturing operations in Mexico, scaling back production capacity in China, and discontinuing its light commercial vehicle e-mobility division.
In November, the company had to revise its revenue forecast for the fourth quarter of 2023 downwards, attributing this to lower demand for its solar inverters. SolarEdge had initially expected Q4/23 revenue to be around $325 million, a significant decrease of 55% from Q3 and a 64% drop from the same period the previous year. However, analysts are now projecting Q4 revenue to be about $371 million, with the company likely to report a loss of $1 per share.
SolarEdge’s Rating Slashed at Barclays
Barclays analysts adjusted their rating for SolarEdge Technologies (NASDAQ:SEDG), downgrading it from Equalweight to Underweight, and reduced the price target from $74.00 to $50.00.
The analysts' comments are based on a comparative analysis with Enphase Energy (ENPH), indicating that SolarEdge is currently trading at a higher valuation than Enphase. After revising their figures, the analysts observe that SolarEdge is trading at a three-turn premium compared to Enphase based on the estimated 2025 earnings per share (EPS), and approximately two turns higher on the 2025 estimated enterprise value to EBITDA (EV/EBITDA) ratio.
Considering the anticipated stronger recovery for Enphase, along with its higher gross margins, the analysts argued that the valuation dynamics should be reversed, with Enphase meriting a higher trading premium than SolarEdge.
SolarEdge’s Rating Slashed at Barclays
Barclays analysts adjusted their rating for SolarEdge Technologies (NASDAQ:SEDG), downgrading it from Equalweight to Underweight, and reduced the price target from $74.00 to $50.00.
The analysts' comments are based on a comparative analysis with Enphase Energy (ENPH), indicating that SolarEdge is currently trading at a higher valuation than Enphase. After revising their figures, the analysts observe that SolarEdge is trading at a three-turn premium compared to Enphase based on the estimated 2025 earnings per share (EPS), and approximately two turns higher on the 2025 estimated enterprise value to EBITDA (EV/EBITDA) ratio.
Considering the anticipated stronger recovery for Enphase, along with its higher gross margins, the analysts argued that the valuation dynamics should be reversed, with Enphase meriting a higher trading premium than SolarEdge.
SolarEdge Technologies Hits With a Downgrade at Wells Fargo
Wells Fargo analysts downgraded SolarEdge Technologies (NASDAQ:SEDG) to Equal Weight from Overweight and slashed the price target to $82.00 from $190.00.
The analysts cited three key concerns prompting the shift to a neutral stance: Firstly, SolarEdge's quarterly demand guidance of $600-$700 million, based on Q3 averages, might be overly optimistic given that September's actual sales, the latest month for which data was available, were lower. This suggests a potential downside if demand remains at September's level.
Secondly, the unexpected drop in month-over-month sales in Europe during September, typically a growth period, raises doubts about the robustness of underlying European demand. Thirdly, SolarEdge's substantial fixed costs could enduringly affect gross margins if demand fails to bounce back.
