Earnings Miss: SolarEdge Technologies, Inc. Missed EPS And Analysts Are Revising Their Forecasts

It's been a mediocre week for SolarEdge Technologies, Inc. (NASDAQ:SEDG) shareholders, with the stock dropping 13% to US$72.79 in the week since its latest third-quarter results. Things were not great overall, with a surprise (statutory) loss of US$1.08 per share on revenues of US$725m, even though the analysts had been expecting a profit. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

Check out our latest analysis for SolarEdge Technologies

Following the recent earnings report, the consensus from 30 analysts covering SolarEdge Technologies is for revenues of US$3.18b in 2024. This implies a not inconsiderable 11% decline in revenue compared to the last 12 months. Statutory earnings per share are forecast to plummet 55% to US$1.71 in the same period. In the lead-up to this report, the analysts had been modelling revenues of US$3.74b and earnings per share (EPS) of US$4.11 in 2024. It looks like sentiment has declined substantially in the aftermath of these results, with a substantial drop in revenue estimates and a pretty serious reduction to earnings per share numbers as well.

The consensus price target fell 15% to US$142, with the weaker earnings outlook clearly leading valuation estimates. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values SolarEdge Technologies at US$382 per share, while the most bearish prices it at US$48.00. We would probably assign less value to the analyst forecasts in this situation, because such a wide range of estimates could imply that the future of this business is difficult to value accurately. 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.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. These estimates imply that revenue is expected to slow, with a forecast annualised decline of 8.5% by the end of 2024. This indicates a significant reduction from annual growth of 28% 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 15% 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 biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for SolarEdge Technologies. On the negative side, they also downgraded their revenue estimates, and forecasts imply they will perform worse than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of SolarEdge Technologies' future valuation.

With that in mind, we wouldn't be too quick to come to a conclusion on SolarEdge Technologies. Long-term earnings power is much more important than next year's profits. We have forecasts for SolarEdge Technologies going out to 2025, and you can see them free on our platform here.

And what about risks? Every company has them, and we've spotted 3 warning signs for SolarEdge Technologies you should know about.

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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.