SolarEdge Posted Solid Q3 Earnings, Raised Target Price

SolarEdge Technologies (SEDG) reported another strong quarter on Wednesday. However, the stock opened almost 2% lower in early trading today. The company posted an adjusted EPS of $1.21, which beat the consensus estimates for the third quarter. The adjusted EPS increased 40% YoY. In the second quarter, SolarEdge earned $0.94 per share. Cowen and Company increased the stock’s target price to $108 from $102, while J.P. Morgan raised it to $105 from $100. Oppenheimer also raised the target price $85 from $78, while Northland Capital raised the target price to $102 today.

So far, SolarEdge and Enphase Energy (ENPH) have reported solid earnings this year. Enphase Energy stock has risen more than 285%, while SolarEdge stock has risen 130% YTD.

SolarEdge’s Q3 earnings

SolarEdge reported total revenues of $411 million for the third quarter—an increase of more than 70% YoY. The company continued to grow its residential and commercial solar inverter business during the third quarter. SolarEdge remains on track for its production ramp-ups in Vietnam, Europe, and China to accommodate the strong demand. The company’s non-solar business achieved break-even on the operating level in the third quarter.

The company expects fourth-quarter revenues of around $410 million–$420 million, which is above analysts’ estimates. Flattish sequential revenue growth in the fourth quarter could bother investors. However, the estimates indicate fiscal 2019 revenues of $1.42 billion, which represents a rise of 70% compared to 2018. The company expects the fourth-quarter gross margin to be 32%–34%. Lower gross margin expectations in the fourth quarter might also concern investors. SolarEdge averaged around 34% in the first nine months of 2019.

Enphase Energy reported its third-quarter earnings last month. The company’s EPS increased 67% YoY to $0.30 per share in the third quarter. Enphase Energy stock has been weak since its third-quarter earnings. Notably, the stock rose approximately 30% after both its first-quarter and second-quarter earnings. To learn more, read Enphase Energy Looks Weak despite Solid Q3 Earnings.

SolarEdge stock traded weak recently. Currently, the stock is trading below its 50-day simple moving average levels. The level close to $84 might act as a resistance for the stock in the short term. The stock is trading close to the oversold zone with its RSI (relative strength index) of 34. Enphase Energy stock is trading in the oversold zone with its RSI at 29.

Read Solar Stocks: Paying Too Much for a Rosy Outlook? to learn about how the top solar stocks are valued after a steep rally this year.

Analysts’ target prices

SolarEdge Technologies stock offers an estimated upside of 16% based on analysts’ mean target price of $93.09. Currently, the stock is trading at $79.91.

Among the 11 analysts covering SolarEdge, six recommend a “buy,” two recommend a “strong buy,” and three recommend a “hold.” None of the analysts recommend a “sell” as of today.

Enphase Energy stock offers a potential upside of 68% compared to its current market price of $18.20. Analysts have given the stock a mean target price of $30.67.