Bulls vs. Bears: Is SolarEdge on the verge of a recovery?

SolarEdge Technologies (NASDAQ:SEDG) was upgraded to buy-rated by Goldman Sachs on Tuesday.

However, the stock has been in a continuing decline since its mid-2022 peak. It is currently down a worrisome 84.22% year-to-date, and it suffered a steep waning since early last year.

Today, however, after the Goldman Sachs upgrade news, the stock is up almost 20%.

Here is what the bulls and bears are saying.

The Bulls

Goldman Sachs on Tuesday upgraded SolarEdge (SEDG) to “buy” from “sell” due to early signs of a recovery that could offer opportunities to investors.

The 12-month price target was increased from $10 to $19, almost a 35% upside.

Goldman analysts said that even though they see a “choppy start” for the solar energy sector (TAN) because of possible policies by the Trump administration, “we see the significant dislocation in our coverage providing idiosyncratic recovery stories and offering incremental opportunities to generate alpha in the space.”

“We see a disconnect between mid-to-long term fundamentals for the solar/storage equities and valuation heading into 2025, with solar equities overpricing risk associated with policy uncertainty despite secular drivers remaining intact, in our view.”

Analysts also said they see the best risk-reward opportunities within the U.S. solar stocks, the utility-scale stocks, and the manufacturing-oriented stocks.

“While our upgrade of SolarEdge (SEDG) to ‘buy’ (from ‘sell’) is likely a bit early, [it] represents a unique recovery story, in our view, that could be poised to benefit from a ‘shrink-to-grow’ strategy starting in 2025.”

The Bears

Seeking Alpha Analyst Harrison Schwartz rates the stock as “sell.” The company had a $1B loss reported in their third quarter results, which caused the stock to decline by about 16%.

“The company recently decided to close its energy-storage unit and lay off 12% of its staff,” he wrote earlier this month. “It is currently down… [with] continued losses throughout the first half of November, likely due to concerns regarding the incoming administration’s impact on U.S. green energy policy, given most solar (TAN) and wind (FAN) stocks fell markedly in early November.”

“I expect that SolarEdge (SEDG) will not see significant demand rebound unless power costs surge again, as they did in 2022,” he said. “Still, with long-term interest rates where they are, I believe that even a 2021-2022 style power increase would not have the same positive impact for SolarEdge.”

Seeking Alpha Investing Group leader Henrik Alex also said earlier in November that he expects SolarEdge (SEDG) to face financial condition concerns weighing on the stock’s shares going forward.