SolarEdge Shares Tank 13% on Weaker Revenue Outlook

Shares in SolarEdge Technologies Ltd. (SEDG) plunged 13% as the solar energy company sees weaker revenue in the second quarter due to the economic impact of the coronavirus pandemic.

SolarEdge Technology expects revenues in the second quarter to fall in the range of $305 million to $335 million, which is below analysts’ consensus of $356 million. The weaker outlook comes as the company posted record sales in the first three months of the year, jumping 58.6% to $431.2 million beating analysts’ consensus of $422 million.

Diluted earnings per share in the first quarter increased to $0.95 from $0.64 in the same quarter last year but missed market estimates of $1.07.

“The first quarter of 2020 was an exceptional one with record revenues of more than $430 million,” said Zvi Lando, CEO of SolarEdge. “The evolving impact of, and responses to, the COVID-19 pandemic on economies around the world, including all of the company’s markets, is unprecedented.”

SolarEdge shares dropped 13% to $109.69 in early afternoon U.S. trading, after soaring 24% over the past month.

Canaccord Genuity analyst Jonathan Dorsheimer downgraded SolarEdge’s stock to Hold from Buy and lowered its price target to $128 from $156.

“With the shares less than 12% off historical highs and visibility worsening from the global pandemic, we just cannot justify a valuation that would support our Buy rating,” Dorsheimer wrote in a note to investors. “As such, we are moving to HOLD and setting a price target of $128, which is based on applying a rich 30x multiple to our 2021E EPS of $4.27.”

Overall, Wall Street analysts have a Moderate Buy consensus rating divided into 7 Holds and 6 Buys. The $126.91 average price target implies 16% upside potential for the shares in the coming 12 months. (See SolarEdge Technologies stock analysis on TipRanks).

Cash flow from operating activities increased to $107.7 million in the first quarter from $56.5 million in the same quarter last year. As of March 31, SolarEdge had $558.7 million in cash, cash equivalents, bank deposits, restricted bank deposit and marketable securities compared to $467.5 million on December 31.

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