Investors in SolarEdge Technologies (SEDG -5.35%), a leading manufacturer of inverters that convert solar energy into usable electric current, had a bad week last week. Reporting earnings Tuesday evening, SolarEdge was forced to admit that its quarterly sales declined 65% year over year, while its year-ago profit flipped to a loss in Q4 2023 -- $2.85 per share in net losses.
But hey, the news wasn't all bad. While admitting that end-market demand looks weak, and SolarEdge is suffering from overstuffed inventory channels that are squelching sales, TD Cowen analyst Jeffrey Osborne nonetheless maintained his "outperform" rating on the stock. Osborne did lower his price target somewhat, from $120 to $100 per share, as reported by TheFly.com last week.
But with SolarEdge closing the week just north of $67 per share, that means that the stock has a potential 48% upside after its sell-off if Osborne's analysis is correct.
Is SolarEdge stock really a buy?
Is that prediction realistic? That SolarEdge stock will bounce back to $100 a share within a year?
Perhaps. CEO Zvi Lando argued last week that despite SolarEdge's troubles, the company is "well positioned for the next growth cycle in our industry."
That being said, this company has just gone from earning $1.65 per share in 2022 to only $0.60 per share in all of 2023 -- and most analysts predict SolarEdge will lose as much as $4.25 per share this year. So even if a "next growth cycle" is coming ... it isn't coming soon.
True, if investors have enough patience, SolarEdge may recover eventually. The company has more cash than debt on its balance sheet and is still free cash flow positive. But at a valuation of 113 times trailing earnings currently, and with SolarEdge forecasting falling sales and continued negative earnings throughout 2024, I'd be in no rush to buy this stock anytime soon -- regardless of what TD Cowen says about it.
