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Cowen analysts labeled SolarEdge Technologies (NASDAQ:SEDG) as one of the firm’s best ideas for 2023, maintaining its Outperform rating on the stock and raising its price target to $360 from $309 per share.
The analysts stated that SolarEdge is “well-positioned” to benefit from solar demand driven by policy and higher electricity rates.
“We believe investors underappreciate the opportunity for SolarEdge to take rooftop market share in Europe from Chinese competitors as it leverages its energy hub capabilities to meet consumer demand shifting toward self-consumption. 2) We highlight SolarEdge’s larger TAM relative to Enphase as SolarEdge serves commercial in addition to residential. Note: Our estimates are largely in line with consensus, and we see multiple expansion as margins improve,” wrote the analysts.
In addition, Cowen views the company as a TAM expansion story “currently addressing residential and commercial, offering a disruptive inverter technology (HD-Wave) designed to work with SolarEdge’s power optimizers to enable conversion of DC to AC power without magnets at the semiconductor level, resulting in a lighter product and one-person installation.”
The analysts also pointed to three primary levers to expand gross margin near term, including the continued ramp of the Mexico facility, the ramp of Sella 2 battery cell facility in South Korea, and higher ASP resulting from recent price increases.
“Establishing manufacturing capacity in the U.S. presents opportunity for margin upside through further reduced tariff and freight exposure,” said the analysts.
