UBS’ Bottom Quant Stocks In AI, IT, Healthcare & Others: 29 Stocks In All Sectors

26. SolarEdge Technologies, Inc. (NASDAQ:SEDG)

Number of Hedge Fund Investors In Q2 2024: 24

Sector: Information Technology

SolarEdge Technologies, Inc. (NASDAQ:SEDG) is a clean energy products company whose products enable users to manage and operate their solar power systems. Solar power stocks typically tend to do well in a low inflation and low interest rate environment which allows plenty of money flowing into the economy for pricey purchases. Consequently, the fact that SolarEdge Technologies, Inc. (NASDAQ:SEDG)’s shares are down 85% year to date is unsurprising as the demand for its products has slowed down significantly and forced the firm to rely on inventory optimization and pricing and promotional campaigns to stem the damage. SolarEdge Technologies, Inc. (NASDAQ:SEDG)’s situation is further complicated by the fact that it has a global operations base. While the American economy has remained robust, Europe has struggled and ended up further impacting revenues. As a result, sustained economic recovery coupled with a favorable regulatory environment in the US are the keys to SolarEdge Technologies, Inc. (NASDAQ:SEDG)’s hypothesis.

SolarEdge Technologies, Inc. (NASDAQ:SEDG)’s management commented on slower demand during its Q3 2024 earnings call:

‘This quarter, we wrote down $612 million of inventory, of which $536 million is related to our solar business and $76 million is related to our non-solar business. This is a result of our assessment of the outlook for various markets, price reductions and promotions taken as part of the market share recapture initiative as well as other steps taken to focus on core markets and product lines. These write-downs fall into the following categories: First, excess inventory, we no longer expect to sell due to lower demand in the European region which we continue to see in this quarter; Second, the accelerated increase in demand for domestic content which came sooner than anticipated and has reduced demand for some products in our inventory; Third, raw materials related to the above-mentioned SKUs; Fourth, partial write-downs of certain SKUs due to the pricing reductions and promotions that we implemented in Europe as we now anticipate selling below cost.”