The stock market has been extremely sensitive to macroeconomic conditions lately, and Tuesday morning's release of Consumer Price Index data from January helped to set the mood on Wall Street for Valentine's Day. The Nasdaq Composite (^IXIC -1.49%) was among the top performers in premarket trading, up about half a percent about 45 minutes before the beginning of the regular trading session.
Yet a couple of stocks listed on the Nasdaq weren't as fortunate, as the release of financial results from the previous quarter caused shareholders to question their future prospects. Outset Medical (OM -5.79%) and SolarEdge Technologies (SEDG -5.35%) have seen considerable volatility lately, but it appears those who had hoped for a more optimistic assessment of their respective businesses from their quarterly reports felt some disappointment. That's not to say that the two growth stocks are down for the count, but investors seem a little less smitten with the companies than they were before.
Losses at the Outset
Shares of Outset Medical dropped 12% in premarket trading Tuesday morning. The maker of innovative dialysis equipment reported fourth-quarter financial results that showed continuing adoption of its technology, but investors had hoped for a more positive view of how 2023 is likely to go.
Outset's quarterly numbers showed progress toward its long-term targets. Revenue of $32 million was up 14% year over year, reaching a new record. Outset closed 2022 with revenue gains of 12% for the full year, and gross margin jumped by nearly 5 percentage points to 16.5% from year-ago levels. The company continued to lose money, but adjusted losses of $0.71 per share were somewhat narrower than they had been in the year-earlier period.
Outset has done a good job of getting its Tablo dialysis system into the marketplace, with about 4,000 systems installed as of year-end. That's 54% higher than it was at the end of 2021, and in particular, Outset doubled the number of Tablo units used by home health providers to nearly 800 units.
CEO Leslie Trigg was optimistic about Outset's future, and the company reaffirmed its guidance for 22% to 30% revenue growth in 2023. Yet investors seemed to want a boost from that previous guidance, and not having gotten it, the fact that losses could continue for a long while took the wind out of Outset's sails.
SolarEdge tries to get its moment in the sun
Meanwhile, shares of SolarEdge Technologies fell 5% in premarket trading. The downward move came despite the company's release of fourth-quarter financial results, which had a lot of positives in them.
SolarEdge certainly didn't seem to do poorly during the last three months of 2022. Revenue of $891 million was up 61% year over year, with a 66% jump from sales in its solar segment. Even better, adjusted net income came in at $172 million, which was almost triple the $63 million SolarEdge made in the fourth quarter of 2021. That worked out to adjusted earnings of $2.86 per share, which was a record result for the company. For the full year, SolarEdge sales climbed 58% to $3.11 billion, and adjusted earnings came in at $5.95 per share.
Yet once again, investors didn't seem satisfied with guidance. SolarEdge projected first-quarter revenue of $915 million to $945 million, with between $875 million and $905 million of that coming from the solar segment. It sees gross margin staying in a range similar to where it was late last year.
Solar power has remained popular as oil prices have moved higher, and SolarEdge's products help commercial and residential users take advantage of the sun's energy. As long as those trends continue, the pullback in SolarEdge's stock seems like a short-term reaction that could reverse itself in the months to come.
