FBR Says SolarEdge 'Firing On All Cylinders,' Hikes Estimates And Target

FBR & Co. on Thursday issued a company update on SolarEdge Technologies, Inc. (NASDAQ: SEDG) after the company reported F2Q16 earnings results that beat expectations. The firm rates SolarEdge Technologies as Outperform and raised its price target from $36 to $38.

Analsyt Carter Driscoll wrote, "We believe SolarEdge Technologies should continue to gain market share in the inverter market, drive down costs with newly architected products and manufacturing automation/efficiencies, and maintain its industry-leading HD Wave technology. In addition, we view the recent ITC extension and California net metering policy changes as tailwinds for SolarEdge."

Analysts at FBR highlighted two key points on why they see strength in SolarEdge Technologies:

1. Profits

In the previous quarter, SolarEdge reported a gross margin of 30.9 percent and EPS of $0.44, both of which significantly exceeded consensus estimates. Going forward, analysts believe that SolarEdge has the potential to further drive profitability due to increasing the efficiencies of its supply chain and decreasing operating and administrative costs.

2. Top line growth

FBR noted that SolarEdge's inverter unit shipments grew 65 percent year-over-year, which shows that there is strong demand for its products and that the company is growing its  market share in the commercial solar market. Analysts further reiterated that the company's new HD wave Technology has the potential to accelerate revenue growth as the technology replaces costly and less efficient equipment.