SolarEdge Technologies (NASDAQ:SEDG) shares fell almost 12% in premarket Wednesday after the company offered a weaker-than-expected Q3 outlook for sales.
SoalrEdge reported Q2 EPS of $2.79, $0.26 better than the analyst estimate of $2.53. Revenue for the quarter came in at $991.29 million, somewhere in line with the consensus of $992.39M.
“We are pleased with our results for the second quarter, in particular our strong performance in Europe in both the residential and commercial solar segments,” said Zvi Lando, chief executive officer of SolarEdge.
“While the U.S. residential solar market is currently seeing some headwinds primarily related to higher interest rates, we are navigating through this period by leveraging our geographic and multi-segment strengths in the solar markets and expect to benefit from the positive long-term outlook for this sector.”
For this quarter, the company sees revenue at $900M (up or down $20M).
BofA analysts slashed the price target by $76 to $320 per share.
“While a headline guidance miss means some of the luster is lost in SEDG’s growth story, headline challenges are different than peers,” the analysts said in a note.
“Guided revenue compression in 3Q is largely a function of EU as opposed to US inventory glut, the latter already reflected in 2Q actuals. Critically, EU inventory glut is supply, as opposed to demand led like the US and largely a collateral effect of sudden price compression in global module pricing. With distributer credit and working capital capacity obfuscating real channel demand currently, EU glut will get worked off. We frankly can’t say the same for the US today.”
Barclays analysts also slashed the price target to reflect a ‘soft’ Q3 revenue outlook.
“Channel inventory to be worked down on the residential side while commercial demand continues to be robust, although margins are temporarily impacted by soft optimizer shipments.”