Why SolarEdge (SEDG) Is Falling Today

Solar inverter maker SolarEdge (SEDG) is retreating 9% after investment bank Northland cut its rating on the company’s shares to Underperform from Market Perform. Northland lowered its price target on the name to $15.

Why Northland Downgraded SEDG

SEDG is producing less-than-satisfactory results in the areas of new products, reliability, and customer service, Northland warned. Northland believes that it will take SEDG significant amounts of time to improve these areas, and it has concerns about the company’s transparency.

Meanwhile, the investment bank predicts that SolarEdge’s net cash will drop to about $300 million by the end of this year.

A photovoltaic field at dawn, its solar panels shimmering in the light of a new day.

Additional Information About SEDG

Yesterday morning, the company reported higher-than-expected Q4 revenue, sparking a rally in its shares. Specifically, it delivered Q4 revenue of $196.2 million, compared with analysts’ average estimate of $188.7 million. And SEDG reported operating cash flow of $37.8 million, versus a cash outflow from operations of $63.9 million in the previous quarter. In Q4 of 2023, its company’s operations burned $140 million of cash.

The shares are changing hands at a price-to-sales ratio of 1.24 times. Analysts on average expect its per-share loss to plummet to $2.79 this year from $22.99 in 2024.

In the last month, SEDG has risen 29.5% while it has jumped 64% in the last three months.

While we acknowledge the potential of SEDG, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than SEDG but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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Disclosure: None. This article is originally published at Insider Monkey.