SEDG: Data Center Partnership And Global Demand Will Offset Policy And Residential Risks

Analysts have modestly trimmed their fair value estimate and price target for SolarEdge Technologies to reflect a slightly higher discount rate and only incremental improvements in long term growth and margins, even as recent Street research has lifted published targets into the high $20s to $40 range, based on expectations for sustained margin strength and expanding C&I and international demand.

Analyst Commentary

Street research has turned more constructive on SolarEdge, with several firms lifting price targets into the high $20s to $40 range as they recalibrate expectations for margins, demand mix, and new growth vectors. The tone, however, remains balanced, with optimism around execution and profitability offset by lingering concerns about end market weakness and long term growth durability.

Bullish and bearish perspectives are emerging around a few key themes that are directly influencing valuation frameworks and the shape of earnings recovery expectations.

Bullish Takeaways

• Several bullish analysts see the recent margin beat and stronger margin outlook as the primary driver of higher price targets, arguing that SolarEdge can sustain improved profitability into 2026 and therefore supports higher normalized earnings power.
• The planned partnership with Infineon on DC based datacenter infrastructure is viewed as a potential new growth vector that could diversify revenue beyond traditional solar channels and justify higher long term growth and multiple assumptions.
• Commercial and industrial and international markets are increasingly highlighted as sources of resilience, with bulls expecting these segments to offset U.S. residential softness and underpin a gradual top line recovery.
• Some upward target revisions in advance of Q3 reporting signal a view that consensus estimates may still be conservative, particularly if SolarEdge can regain share in key markets and execute against a more favorable product and geographic mix.

Bearish Takeaways

• Bearish analysts continue to emphasize structural pressure in U.S. residential solar, including the impact of 25D changes in 2026. They believe this could cap volume growth and limit upside to revenue forecasts despite better margins.
• There is caution that recent share price volatility around earnings and guidance, including sharp premarket declines followed by intraday reversals, reflects fragile investor confidence and execution risk that warrants restrained valuation multiples.
• Some Street views maintain more conservative stances even after raising targets, keeping the stock in sell or neutral territory and signaling skepticism that margin strength and new initiatives can fully offset cyclical and policy driven demand headwinds.
• Analysts noting that utility scale and diversified clean energy players are better positioned see SolarEdge as more exposed to mixed residential dynamics, supporting only incremental target increases rather than a more aggressive rerating.

What's in the News

• SolarEdge and Infineon announced a collaboration to develop a modular 2 to 5 MW solid state transformer platform aimed at ultra efficient, DC based power architectures for next generation AI and hyperscale data centers, positioning SolarEdge to expand into high growth data center markets (Key Developments).
• The company reported that more than 500 MWh of its residential battery capacity is now enrolled in Virtual Power Plant programs across 16 U.S. states and Puerto Rico, highlighting momentum in grid services and recurring revenue style opportunities (Key Developments).
• SolarEdge provided fourth quarter 2025 revenue guidance of 310 million dollars to 340 million dollars, giving investors a clearer view on the expected pace of recovery in demand and shipments (Key Developments).
• SolarEdge announced its first commercial battery installations in Germany using the new CSS OD commercial storage system, with over 150 orders in the first weeks after launch. This signals strong early European demand for integrated C&I PV plus storage solutions (Key Developments).
• The White House is considering canceling an additional 12 billion dollars in U.S. clean energy funding as part of a broader policy push. This represents a potential overhang for the sector that includes SolarEdge and other listed renewable energy players (Semafor).

Valuation Changes

• Fair Value Estimate has edged down slightly from 33.22 dollars to 33.04 dollars per share, reflecting a modestly more conservative valuation framework.
• Discount Rate has risen slightly from 14.61 percent to 14.75 percent, modestly increasing the required return applied to future cash flows.
• Revenue Growth Assumption is effectively unchanged at around 14.18 percent, indicating a stable view on top line expansion prospects.
• Net Profit Margin Assumption remains essentially flat at about 7.09 percent, suggesting no material change in long term profitability expectations.
• Future P/E Multiple has ticked down marginally from 29.47 times to 29.42 times, implying a slightly lower valuation multiple on forward earnings.