SolarEdge ‘caught in the perfect storm of overflowing channel inventory’; BofA downgrades

BofA analysts downgraded SolarEdge Technologies Inc (NASDAQ:) shares to Neutral from Buy and aggressively cut the price target to $180 per share as they believe the company is “caught in the perfect storm of overflowing channel inventory.”

“After recent checks with installers and distributors, we grow incrementally bearish on the medium-term component sales outlook,” the analysts wrote in a client note.

They argue that SEDG finds itself navigating through a turbulent sector landscape, marked by a series of complex challenges affecting unit sales, namely: challenging U.S. and EU demand, as well as grappling with constraints on critical components for key end markets.

“Topline deceleration is detrimental for this growth stock, due to potentially lost operating leverage from C&I and storage weakness,” the analysts added.

This uncertainty has prompted BofA to lower its 2024 revenue forecast by 24%.

“Once inventory health normalizes, we expect a return to growth; in the meantime, with lesser downside risk, we downgrade our rating,” they concluded.

SolarEdge stock is down 42.7% year-to-date.