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SolarEdge Technologies may have moved too high, too fast, according to JPMorgan. The firm downgraded shares of the company to neutral from overweight but upped its price target to $23 from $18. That updated target still calls for about 14% downside from Monday’s close. The stock has been on a monster rally as of late, gaining more than 110% in the past three months and more than 96% year to date. This month alone, SolarEdge is up about 31%. “Given SEDG’s outperformance since May 1 (up 109% vs coverage average up 33%), we are downgrading to Neutral and look for pullbacks or signs of stronger than expected market share gain and/or margin expansion to add to positions,” analyst Mark Strouse wrote in a Tuesday note. SEDG 3M mountain SEDG, 3-month To be sure, while the analyst is stepping to the sidelines now, he anticipates that the name will ultimately be able to move higher long term thanks in part to its “relatively higher” exposure to the lease and power purchase agreement (PPA) market. “SEDG’s 45x manufacturing credits are unchanged from the [Inflation Reduction Act], and tax credit transferability rules are also unchanged, meaning that SEDG should likely continue its cadence of quarterly transfers,” Strouse also wrote. “We believe the larger driver for the stock will be the new management’s focus on efficiency and [stock-keeping unit] rationalization, for which we are encouraged by initial progress, though it is still early.” Strouse’s move now puts him in the majority of analysts on Wall Street with a neutral view of the stock, which was nearly 2% lower in the premarket Tuesday. Twenty out of 31 analysts in total have a hold rating, while only one has a buy rating, according to LSEG data. Elsewhere in the energy technology space, the analyst likewise downgraded Enphase Energy to neutral from overweight, citing anticipated loss in share and margin pressure as third-party owned (TPO) systems gain traction within the industry.
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