SolarEdge Technologies (SEDG) is an Israeli multinational energy technology provider. It has developed an intelligent inverter solution for solar power systems to increase power output while reducing energy costs. The company’s other solutions address needs in energy market segments, including power storage, electric vehicle charging, electric vehicle powertrains, and grid services.
The company has a manufacturing facility in Vietnam, but it had to shut down the plant for 12 weeks during Q3 2021 due to COVID-19 pandemic-related issues.
SolarEdge’s earnings report shows revenue increased 56% year-over-year to $526.4 million in Q3 but missed the consensus estimate of $529.6 million. The solar segment currently accounts for the bulk of SolarEdge’s business and generated revenue of $476.8 million during the quarter.
The company posted adjusted EPS of $1.45 versus $1.21 in the same quarter last year and beat the consensus estimate of $1.37. It ended the quarter with $524.1 million in cash, net of debt.
For Q4, SolarEdge anticipates revenue in the band of $530 million to $560 million. It expects solar segment revenue in the range of $490 million $515 million.
With this in mind, we used TipRanks to take a look at the risk factors for SolarEdge.
Risk Factors
According to the new TipRanks Risk Factors tool, SolarEdge’s main risk categories are Finance and Corporate and Ability to Sell, each representing 23% of the total 40 risks identified for the stock. Production and Tech and Innovation are the next two major risk categories at 20% and 13% of the total risks, respectively.
In a newly added Ability to Sell risk factor, SolarEdge cautions investors that its electric vehicle powertrains business could be hurt by the global chip shortage that has hit the automotive industry. It mentions that the component shortages could drag into 2023. As a result, an automotive manufacturer that purchases powertrain units from SolarEdge has decided to temporarily stop production. SolarEdge warns that the customer’s move to suspend manufacturing may delay orders for its powertrain units and result in inventory buildup, which may adversely affect its sales and other financial results.
The Finance and Corporate risk factor’s sector average is 36% compared to SolarEdge’s 23%. SolarEdge’s stock has declined about 13% year-to-date.
Analysts’ Take
Citigroup analyst J.B. Lowe recently reiterated a Buy rating on SolarEdge stock but lowered the price target to $385 from $435. Lowe’s reduced price target still suggests 38.47% upside potential.
Consensus among analysts is a Moderate Buy based on 14 Buys, 4 Holds, and 1 Sell. The average SolarEdge Technologies price target of $377.59 implies 35.80% upside potential to current levels.
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