SolarEdge downgraded at TD Cowen on continuing headwinds in Europe

SolarEdge Technologies (NASDAQ:SEDG) -4.2% in Monday’s trading after TD Cowen downgraded shares to Hold from Buy with a $16 price target, slashed from $35, citing deteriorating demand in Europe and continued uncertainty over the company’s interim CEO and potential for an additional capital raise.

Q3 residential installations in Germany fell 13% Q/Q and 29% Y/Y, indicating a weak quarter for residential in Europe – Germany accounted for 23% of SolarEdge (SEDG) revenues in 2023 – and pricing also is a concern in Europe, as Chinese competitors remain aggressive to take share, TD analysts said.

Given liquidity concerns, TD sees the need for an immediate reduction in overhead/expense, which an interim CEO may not be able to accomplish, the bank’s analysts said, adding they would not be surprised to see SolarEdge (SEDG) announce a ~$1.5B writedown of inventory with Q3 results, especially battery related, although any such writedown should not have a cash impact on the business.

SolarEdge (SEDG) shares recently were downgraded to Sell equivalent ratings by analysts at Guggenheim and Jefferies (I, II).