Investing.com -- Jefferies upgraded SolarEdge to Hold from a underperform rating, saying renewed volatility in European energy markets tied to the Middle East conflict could support demand, though much of the upside appears priced in. Shares of the company were 4% in Friday premarket trading.

Surging gas prices after the start of Russia-Ukraine war drove a sharp rise in European solar adoption, lifting SolarEdge’s regional revenue to $1.9 billion in 2023 from $630 million in 2020.

The brokerage bumped its price target to $49 from $30.

European gas prices, measured by the TTF benchmark, have risen about 94% since the latest conflict began, creating a potential catalyst for increased solar and storage demand as households and businesses seek more stable energy costs.

Though any demand rebound to be more moderate than the surge seen between 2020 and 2023, says Jefferies given renewable penetration is already higher and power prices have remained relatively stable despite rising gas costs.

The firm said SolarEdge’s earnings outlook has improved, supported by stabilizing conditions in Europe after a period of inventory correction. The company has gained share in commercial and industrial segments and maintained a steady position in residential markets, with further gains expected in 2026.

Jefferies raised its revenue forecasts for 2027 and 2028 by 17% and 19%, respectively, while leaving 2026 largely unchanged as customers take a cautious approach amid uncertainty.

The upgrade stops short of a Buy rating, with the brokerage citing valuation.

SolarEdge shares have risen about 60% this year and trade near 18x estimated 2027 EV/EBITDA, slightly above peers, suggesting the market already reflects expectations of stronger demand and market share gains.