BMO says SolarEdge rally overdone, downgrades stock

Investing.com -- BMO Capital Markets downgraded SolarEdge Technologies (NASDAQ: SEDG) to "Underperform" from "Market Perform" and set a price target of $15 given concerns over the sustainability of the recent rally.

The brokerage noted that SolarEdge's fourth-quarter update, which showed sufficient liquidity to retire its $347.5 million convertible notes maturing in September 2025 without issuing equity, drove a 16% rally in the stock.

However, BMO believes the surge was largely fueled by short covering and does not reflect the company’s underlying business performance.

BMO pointed to continued weakness in SolarEdge’s core inverter and battery business, noting that the company remains several quarters away from achieving break-even operating income.

The firm estimates that even with significant improvements in demand, pricing, and cost structure, SolarEdge may not reach positive adjusted operating income until 2027.

BMO views the recent stock outperformance as unsustainable given the company’s revenue and margin challenges.

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