What Happened?
Shares of solar power systems company SolarEdge (NASDAQ:SEDG) jumped 17.6% in the morning session after the stock received a double rating upgrade from Goldman Sachs. The firm upgraded Solar Edge from Sell to Buy and raised the stock's price target from $10 to $19. The new price target implies a potential 50% upside from where shares traded before the upgrade was announced.
Analyst Brian Lee added, "We see the makings of a turnaround story that is one of the more idiosyncratic and out-of-consensus buy opportunities in our coverage... We anticipate 2025 to be a key inflection point and, while 1H25 may still be volatile, we view most concerns as already priced into the equity."
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What The Market Is Telling Us
SolarEdge’s shares are extremely volatile and have had 75 moves greater than 5% over the last year. But moves this big are rare even for SolarEdge and indicate this news significantly impacted the market’s perception of the business.
The biggest move we wrote about over the last year was about a month ago when the stock dropped 22.3% on the news that the company reported underwhelming third-quarter earnings. Its revenue guidance for the next quarter missed, and its revenue fell short of Wall Street's estimates. Notably, the company wrote down $612 million in inventory, reflecting lowered demand, particularly in Europe. As a result, SolarEdge implemented price cuts and promotional discounts to compete in this market, which is likely to result in a shortfall in its margins. Lastly, the company called out seasonal weakness heading into the winter. Overall, this was a challenging quarter for the business, with little reasons for investors to stay positive.
SolarEdge is down 84.6% since the beginning of the year, and at $14.15 per share, it is trading 86.2% below its 52-week high of $102.24 from December 2023. Investors who bought $1,000 worth of SolarEdge’s shares 5 years ago would now be looking at an investment worth $154.75.
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