Analysts Have Lowered Expectations For SolarEdge Technologies, Inc. (NASDAQ:SEDG) After Its Latest Results

It's been a mediocre week for SolarEdge Technologies, Inc. (NASDAQ:SEDG) shareholders, with the stock dropping 14% to US$22.87 in the week since its latest quarterly results. SolarEdge Technologies reported revenues of US$265m, in line with expectations, but it unfortunately also reported (statutory) losses of US$2.31 per share, which were slightly larger than expected. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

Check out our latest analysis for SolarEdge Technologies

Taking into account the latest results, the 32 analysts covering SolarEdge Technologies provided consensus estimates of US$1.13b revenue in 2024, which would reflect a sizeable 25% decline over the past 12 months. Per-share losses are predicted to creep up to US$9.12. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$1.26b and losses of US$7.65 per share in 2024. So there's been quite a change-up of views after the recent consensus updates, withthe analysts making a serious cut to their revenue outlook while also expecting losses per share to increase.

The average price target fell 10% to US$39.80, implicitly signalling that lower earnings per share are a leading indicator for SolarEdge Technologies' valuation. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values SolarEdge Technologies at US$100.00 per share, while the most bearish prices it at US$19.00. With such a wide range in price targets, analysts are almost certainly betting on widely divergent outcomes in the underlying business. With this in mind, we wouldn't rely too heavily the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We would highlight that revenue is expected to reverse, with a forecast 44% annualised decline to the end of 2024. That is a notable change from historical growth of 18% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 18% annually for the foreseeable future. It's pretty clear that SolarEdge Technologies' revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at SolarEdge Technologies. On the negative side, they also downgraded their revenue estimates, and forecasts imply they will perform worse than the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple SolarEdge Technologies analysts - going out to 2026, and you can see them free on our platform here.

Don't forget that there may still be risks. For instance, we've identified 1 warning sign for SolarEdge Technologies that you should be aware of.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.