In a report released today, Edwin Mok from Needham reiterated a Buy rating on SolarEdge Technologies (NASDAQ: SEDG), with a price target of $25.
And it’s getting crushed for lowering his target.
Capitulation day…?
Decent Fool article here;
http://www.fool.com/investing/2016/09/09/buy-solaredge-but-s…
JT
JT,
Thanks. I think we’ve got to be close to peak negativity. The JPM stuff, especially regarding the competition going bankrupt, certainly seems to bode well.
I’m trying to figure out what the market is seeing that I’m not. Will Solaredge’s technology become commoditized or obselete? Will customers go on a buying freeze? (thinking INFN here)
Basically, are earnings and revenue going to be disrupted? If so, how? The share price seems to bake in some kind of catasrophic event, rather than the growth and profitability which they’ve demonstrated.
I couldn’t resist adding to my already large position today.
Bear
The price of oil may slow larger applications of solar like solar farms etc.
I believe SEDG is mostly smaller home installations and such and despite oil being down my electric bill is as big as ever, especially my AZ residence.
Solar is not in favor right now, shrug.
JT
I like SEDG at current pricing and will probably add to my position sometime soon, too. I don’t think there’s a rush, as I don’t see much that could cause a sudden increase in price until the next earnings release. I think the stock price will swing with the overall market and with oil (or upgrades or downgrades, as seen today).
I think the biggest reason for the recent negative pricing surrounding SEDG is how quickly the very high growth of the last couple years slowed to basically no growth currently. They seem to have stagnated at quarterly revenues around $125M and earnings of 0.45 - 0.50 for the past few quarters and not much better going forward (although they only give guidance for one quarter ahead).
I do think these ranges are temporary, though, and will get back to growth over the next couple years both in the US and overseas (still currently growing for SEDG).
One worry brought up on the call was Tesla integrating inverters in-house on their Powerwall units, as currently they use Solaredge products, but that business is so small currently, I really don’t see it as an impact (sure a potential future impact).
Also, the SolarCity issues hit SEDG, but they are less than 10% of their business, and I think solar is going to continue to gain adoption over the coming years and SEDG should be a beneficiary of that increase.
They seem to have transitioned from a “growth” play to a “value” play at this point, as their PE is very low, with no debt and a fair amount of cash. I think growth will resume in the future and the PE will expand at that point, giving us the price increase we’re looking for.
I agree with your analysis Foodles. Very good stuff. Only thing I would say is, regarding this:
I don’t think there’s a rush, as I don’t see much that could cause a sudden increase in price until the next earnings release. I think the stock price will swing with the overall market and with oil (or upgrades or downgrades, as seen today).
I’m certainly not saying to rush, but I don’t know that I’d wait. There’s just no telling when the market’s affections will change. I have given up trying to predict WHEN the market will shift its favor toward or away from any particular security. I just know that, based on the current P/E, I’m willing to own more now. If the PE goes even lower, I’ll be willing to own even more. See: SKX.
Bear