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Investing.com - Goldman Sachs downgraded SolarEdge Technologies (NASDAQ:SEDG) to Sell from Neutral and lowered its price target to $31 from $36.
The firm said its downgrade is based on the view that SolarEdge’s core end markets are not growing as fast as current consensus expectations imply. Goldman Sachs said the company’s sales and margin recovery is more than fully appreciated in the current valuation. The company’s gross profit margin stands at just 15.42% over the last twelve months, reflecting ongoing profitability challenges.
The stock’s recent rally—up 239% over the past year—suggests expectations for potential upside from a material improvement in European demand stemming from rising energy prices following the outbreak of war in Iran. Goldman Sachs said this appears to be creating a higher bar of expectations and sees downside risk to consensus earnings per share in 2026 and 2027.
SolarEdge’s valuation remains elevated and is currently trading at the highest price-to-earnings multiple on a forward two-year basis among solar equipment peers, according to Goldman Sachs. The stock trades at a Price/Book ratio of 6.07, and InvestingPro Tips highlight that the company is "Trading at a high Price/Book multiple." Interestingly, InvestingPro’s Fair Value analysis suggests the stock may be slightly undervalued at current levels. The firm said it sees potential for SolarEdge’s premium multiple to erode over the near-term.
The downgrade represents a 28% downside to Goldman Sachs’ new 12-month price target of $31, compared to 36% average upside across the firm’s solar coverage.
In other recent news, SolarEdge Technologies has been at the center of several significant developments. The company announced that its Chief Financial Officer, Asaf Alperovitz, will step down in June to join another public company, prompting the Board of Directors to begin searching for his replacement. Despite this leadership change, Oppenheimer maintained a Perform rating on SolarEdge, acknowledging the company’s efforts in refining its product portfolio and optimizing its balance sheet. Meanwhile, Mizuho lowered its price target for SolarEdge to $32, maintaining a Neutral rating, but noted that the company exceeded fourth-quarter expectations on sales and margins. Jefferies upgraded SolarEdge from Underperform to Hold, raising its price target to $49, citing increased European energy revenue driven by regional volatility. These developments come amid broader sector volatility, as highlighted by Wolfe’s analysis of the technology sector’s downturn. SolarEdge’s ongoing adjustments and financial strategies continue to draw attention from multiple analyst firms.
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