SolarEdge shares surge after quarterly earnings top estimates

A Solarpro employee will install a SolarEdge Technologies Inc. inverter in a residential building in Sydney, Australia on Monday, May 17, 2021.

Brendon Thorne | Bloomberg | Getty Images

SolarEdge’s shares rose nearly 12% in early trading Tuesday after the company beat expectations and issued a positive forecast in the second quarter.

SolarEdge’s results are due to the fact that chip scarcity and rising raw material costs have weighed on the solar sector in general.

“We are successfully navigating the challenging supply chain environment while supporting the growth and expansion of our customers with new and existing products,” said Zvi Lando, CEO of SolarEdge, in a statement.

The company reported adjusted earnings of $ 1.28 for the quarter, which StreetAccount estimates was above the 89 cents analysts expected. Revenue of $ 480.1 million was also above the expected $ 455.9 million.

Looking ahead to the third quarter, the company expects revenues between $ 520 million and $ 540 million, while The Street had expected a forecast of $ 504.5 million.

Citi upgraded the stock to a buy rating following the quarterly update, citing SolarEdge’s expansion into the residential storage space as an upward catalyst. The company has signed an agreement with Samsung on cells to accelerate its energy storage product through 2022.

Citi also raised its target price on the stock from $ 300 to $ 360, which is 40% above the value the stock closed on Monday.

“SEDG benefited from sales of power optimizers related to its new commercial inverter and achieved better than expected margins in both solar / non-solar segments,” added Piper Sandler, who has overweighted the stock.

Back in May, SolarEdge executives warned that the company could experience margin erosion due to the doubling in ocean freight prices. Last week, both Generac and Enphase warned that, given a boom in the solar market and shortages in the supply chain, supply will not be able to keep pace with demand.

“We viewed component shortages as a major pre-bid risk, and as such, SEDG’s ability to demonstrate line of sight to execute at short notice stands out as positive,” said research firm Truist. “With the underperformance in print, we see that pricing power, battery usage and pressure in the supply chain are easing, leading to a short-term recovery in the stock.”

The company reiterated its buy rating for the company after earnings and also raised its price target on the stock from $ 325 to $ 340.

SolarEdge’s shares were down 19% for the year to close on Monday.

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