BMO downgrades SolarEdge amid concerns over earnings power
- BMO Capital Markets downgraded SolarEdge shares to underperform due to ongoing challenges in the company's earnings performance.
- Analyst Ameet Thakkar raised the price target to $15, while indicating that shares might decline over 23%.
- The analysis suggests that substantial headwinds for SolarEdge persist, limiting its ability to achieve break-even operating income in the near future.
On February 20, 2025, BMO Capital Markets released a note regarding the financial outlook of SolarEdge Technologies, suggesting that the recent stock rally was excessive. Analyst Ameet Thakkar noted that while there was a perception of increased liquidity following SolarEdge's quarterly financial results, the company's fundamentals reflected continued struggles. Despite the stock rallying approximately 20% following a quarterly report that beat revenue expectations but showed a loss, Thakkar indicated that the operational earnings of the company faced significant headwinds. As a result, BMO downgraded SolarEdge's shares, indicating a shift in focus from short-term liquidity towards long-term earnings sustainability. This adjustment raised the price target to $15, yet still implied a potential decline of more than 23% in share value. The overall analysis pointed to insufficient performance in SolarEdge's core inverter and battery sectors, causing concerns about the company's future profitability. Thakkar was cautious in stating that achieving break-even operating income would take several quarters, urging investors to reconsider the sustainability of the current market valuation and rally. The report illustrated the ongoing challenges SolarEdge faces, suggesting these issues are likely to dominate narratives surrounding the company's performance in the future.