Investing.com -- Goldman Sachs upgraded SolarEdge Technologies Inc (NASDAQ:SEDG) to buy from sell, on early signs of a recovery and the company’s shrink-to-grow restructuring strategy, which is expected to stabilize its balance sheet.
The brokerage raised its 12-month price target to $19 from $10, a nearly 35% upside.
Goldman noted that investor fears over SolarEdge's liquidity and its ability to address the $350 million debt due in 2025 are overblown. The company’s ongoing cost-cutting measures, including headcount reductions and operational efficiencies, are expected to alleviate its free cash flow concerns. This, combined with improving product mix, could provide a near-term boost to margins and earnings.
The brokerage also highlighted broader growth trends in the solar market as supportive of SolarEdge’s recovery. Goldman expects a return to growth in residential solar installations in 2025, particularly in the U.S. and Europe, which are key markets for SolarEdge.
A recovery in utility-scale solar installations, coupled with rising power demand, could further lift sector sentiment.
Even with near-term challenges from policy uncertainty and competition, Goldman sees SolarEdge’s restructuring efforts as a turning point.
It sees an improving earnings momentum by late 2025, with a sharper acceleration in 2026 as cost efficiencies take hold and demand stabilizes. Goldman also views current valuations attractive, with significant upside if execution improves
This content was originally published on Investing.com
