SolarEdge Technologies (SEDG): Assessing Valuation After Infineon Partnership and Q3 Results

SolarEdge Technologies (SEDG) attracted attention after unveiling a partnership with Infineon to deliver high-efficiency power solutions for AI-driven data centers. The company also reported Q3 results, noting a narrowing net loss and rising sales.

See our latest analysis for SolarEdge Technologies.

Between the Infineon partnership and continued traction in battery storage and grid services, SolarEdge is attracting attention well beyond its core solar business. While the last week has seen the share price slide, momentum has picked up this year, with a strong year-to-date share price return of 115%. However, the longer-term total shareholder return remains deep in the red, which reminds investors that there is still risk alongside the recent optimism.

If SolarEdge’s pivot to next-generation energy solutions has you thinking about what else is on the move, now is a great time to discover See the full list for free.

With shares rebounding strongly this year and new markets in focus, the question now is whether SolarEdge remains undervalued, or if the market has already priced in the company’s data center ambitions and turnaround story.

Most Popular Narrative: 16.7% Overvalued

SolarEdge Technologies last closed at $31.82, yet the most followed narrative suggests a fair value closer to $27.27. The latest consensus sees the market getting ahead of itself, with valuation assumptions underpinned by shifting outlooks for profit margins and growth prospects.

The current valuation may overlook intensifying industry competition and hardware commoditization, as price and market share battles in both Europe and the US, including potential further pricing actions, could undermine net margins despite advances in new platforms and innovation.

Read the complete narrative.

What is fueling this premium? The narrative banks on big leaps in future margins and earnings, even as rivals dig in. One wild assumption could be pushing the fair value higher than most might expect. Want the full story and the numbers driving this bold forecast? You will have to read on to see exactly which growth rates and profit targets anchor this valuation.

Result: Fair Value of $27.27 (OVERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, sustained policy incentives and accelerating battery storage demand could drive stronger earnings recovery than many expect. This could potentially challenge the current overvaluation view.

Find out about the key risks to this SolarEdge Technologies narrative.

Another View: Discounted Cash Flow Model Suggests a Different Story

While our earlier discussion focused on market-based valuation, the SWS DCF model presents a very different perspective. According to this method, SolarEdge appears significantly undervalued, with its current price trading almost 50% below our calculated fair value. Does this suggest hidden potential, or is the market right to be cautious?

Look into how the SWS DCF model arrives at its fair value.

Build Your Own SolarEdge Technologies Narrative

If you see things differently or want to dive deeper into the numbers yourself, it takes just a few minutes to craft your own view and narrative. Do it your way

A great starting point for your SolarEdge Technologies research is our analysis highlighting 2 key rewards and 1 important warning sign that could impact your investment decision.

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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.

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