SolarEdge Analysts Highlight Accelerating Demand With Margin Upside Post Q3 Results - SolarEdge Technologies (NASDAQ:SEDG)

Needham analyst Vikram Bagri maintains SolarEdge Technologies Inc SEDG with a Buy and cut the price target from $380 to $370.
SEDG reported a mixed 3Q22 with a beat on revenues, but a large EPS miss primarily due to higher taxes.
The guidance implies a sequential step-up in gross margin in 4Q22, but flat operating margins as 3Q22 benefited from an FX impact on OpEx.
Management expects to reach gross margin outlined at the analyst day by 2Q23, driven by solid revenue growth, margin expansion, and operating leverage.
Production improved with Shanghai exiting lockdown restrictions, though some shipments still required expediting, given the low inventory heading into 3Q22.
Supply chain rather than production remains the bottleneck.
BMO Capital analyst Ameet Thakkar reiterated Outperform and raised the price target to $316 from $306.
He came away from SEDG 3Q22 earnings feeling a bit more confident that margins likely bottomed out during Q2, and the last three-quarters of worse-than-expected margins were not a result of any structural issues.
He saw near-term drivers like more Mexico ramps and less need for expedited shipping.
He also saw longer-term drivers, like U.S. contract manufacturing, shift to self-supply on battery sales.
All the factors will likely help re-focus investors on SEDG’s ability to play a significant role in solar growth in Europe and elsewhere.
Stephens analyst Cameron Lochridge reiterated Overweight. He noted that Q3 results reflect strong shipments for both inverters and battery solutions, particularly in Europe.
Despite headwind related to FX, adjusted gross margins expanded Q/Q as supply chain pressures eased and pricing actions took hold.
Additionally, operating leverage drove the decline in opex as a percent of sales in the Solar segment.
Looking ahead, SEDG guided 4Q22 revenue above prior consensus at the midpoint while adjusted gross margins will likely move higher, which he views as critical for sentiment to begin improving.
Price Action: SEDG shares traded higher by 18.1% at $249.63 on the last check Tuesday.
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