Why This SolarEdge Analyst Is Cutting Estimates Ahead Of Q3 Earnings

SolarEdge Technologies Inc (NASDAQ:SEDG) shares have lost more than 80% year to date.

Estimates for the company have been lowered following the release of Enphase Energy Inc's (NASDAQ:ENPH) third-quarter results, according to JPMorgan.

Analyst Mark Strouse maintained an Overweight rating for SolarEdge Technologies while lowering the price target from $35 to $29.

The SolarEdge Technologies Thesis: Enphase Energy's quarterly results reflect weaker-than-expected demand in Europe for solar and storage, Strouse said in the note.

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"ENPH reported a 34% sequential decline in European sell-thru during 3Q and commented that market conditions in the continent remain generally challenged," he wrote.

Although Enphase Energy is not a direct competitor, SolarEdge Technologies has significant exposure to Europe, which contributes around 60% to 65% of its sales, the analyst stated. He lowered the estimate for the third quarter to a loss of 38 cents per share, versus the previous estimate of 12 cents per share.

SolarEdge Technologies could burn cash of around $173 million between the third quarter of 2024 and the first quarter of 2025, due to which lingering concerns around the company's liquidity could "remain an overhang on the stock until visibility into cash generation improves," Strouse added.

SolarEdge Technologies is scheduled to report its third-quarter results on Nov. 6.

SEDG Price Action: Shares of SolarEdge Technologies had declined by 13.14% to $15.27 at the time of publication on Wednesday.

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