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Gordon Johnson On SolarEdge And 'The China Threat'

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Gordon Johnson On SolarEdge And 'The China Threat'

AXIOM Equity Research termed Solaredge Technologies Inc (NASDAQ: SEDG) shares as worth selling, pointing out the real threat from Chinese panels. The firm initiated coverage with a Sell rating and set a target price of $10 on the stock implying more than 30 percent downside risks from the current levels.

Analyst Gordon Johnson pointed out that SolarEdge is already suffering volume growth with 50.4 percent year-over-year uptick in the second quarter of the calendar year compared to 196.5 percent in the first quarter of calendar year 2015. The company guided volume growth of 33 percent and 20 percent in the current calendar year's third and fourth quarter respectively.

On top of these, Chinese firms would enter into the American solar market with the pricing expected to be low. This would enable Chinese firms to take share from their rivals in the United States.

Related Link: Goldman Sachs' Mixed Bag Of Solar Ratings

In a research note, the brokerage said, "We expect the stellar growth/earnings that has defined the company, & endeared the stock to many investors — SEDG has bested Consensus EPS ests. for six straight quarters — to come to an abrupt end (our model suggests >51 percent downside to Consensus views of $1.97 in SEDG CY17 EPS power."

Wedbush also expects average selling price to drop since Chinese panels are offered at 30–40 percent below SolarEdge's price. The firm expects SolarEdge's ASP to witness a 13.5 drop next year and that with high embedded fixed unit costs, the company's margin is set for a downslide.

The stock traded down by $0.35, or 2.29 percent, to $14.95 at last check.

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Latest Ratings for SEDG

DateFirmActionFromTo
Feb 2020Credit SuisseMaintainsNeutral
Feb 2020UBSMaintainsNeutral
Feb 2020CascendMaintainsBuy

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