FBR Capital Cuts Price Target on SolarEdge Technologies (SEDG) Following 4Q Report
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FBR Capital maintained an Outperform rating on SolarEdge Technologies (NASDAQ: SEDG), and cut the price target to $32.00 (from $38.00), following the company's 4Q earnings report. SEDG delivered revenues of $124.8M and non-GAAP EPS of $0.44. The company also grew operating cash by $17.3M and now has $4.08/share in net cash.
Analyst Carter Driscoll commented, "Yesterday, August 9, SEDG delivered F4Q16 results that we think should put some of the more bearish fears to rest. While revenues were at the low-end of the guided range, gross margins exceeded the range, suggesting SEDG continues to value sustained profitability above chasing a few points of less profitable market share. SEDG is increasingly diversified geographically and by customer as improving sales to Germany, the Netherlands, and Australia offset a weak U.S. residential market. SEDG believes the U.S. residential slowdown is a temporary reaction to the ITC extension, and we agree. With 2%–3% U.S. residential solar market penetration, management believes the U.S. market could grow 30%+ for some time. ASP pressure remains manageable, falling 2.7% per watt in F4Q16, which was within SEDG's planned 5%– 10% annual decline. As SEDG ramps up its new HD Wave inverter architecture over the next four quarters, we believe the company should continue to stay ahead of ASP declines, keeping the margin profile intact. Given the very negative sentiment surrounding the solar space, we have lowered our FY17 target multiple assumption from 19x to 16x, which causes our price target to fall to $32 from $38."
Shares of SolarEdge Technologies closed at $18.62 yesterday.
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