As years go by, 2024 has not been a great one for shares of SolarEdge Technologies Inc NASDAQ: SEDG. The $800 million market cap stock is down 85% since the start of January, which means it’s back trading at 2016 levels. For any investor that was involved in SolarEdge in the 8 years since then, it’s been a rollercoaster of a ride, to say the least.
SolarEdge Technologies Today
SolarEdge Technologies
(As of 05:36 PM ET)
- 52-Week Range
- $10.24
▼
$102.62
- Price Target
- $22.40
At one point during the mania of the pandemic-fuelled tech bubble, the stock was up almost 2,500%. But like so many of the hot stocks that came to characterize the market’s frothiness at that time, there was little substance behind it all. Hence, the eye-watering plunge since then.
However, for those of us who are looking at SolarEdge with a fresh pair of eyes, there are a few reasons to be excited, albeit cautiously. The stock has gained 40% in the past month, and while it’s still very much in a downtrend, it is now trading at a level of long-term support.
How Technical Support Levels Could Boost SolarEdge Stock
It was around the $14 mark that the bears ran out of steam 8 years ago, and it’s starting to look like they may be at risk of doing the same this time around. Leaving aside fundamental performance or broader market sentiment, technical levels like this can greatly impact a stock’s direction and can often be self-fulfilling prophecies.
When a beaten-down stock is approaching a key level of support, many investors expect it to hold, so the braver ones often start to buy a beleaguered stock as it approaches that level. This increased demand gives the stock a much-needed boost and puts the bears on the back foot. As it then appears that the line of support is indeed holding, more investors take this as a confirmation sign and begin to pile in. Before you know it, the bears have given up trying to take the stock down to fresh lows. They’re buying to cover their short positions, and the stock is surging, perhaps even with a short squeeze thrown in for good measure.
Goldman Sachs Upgrades SolarEdge from Sell to Buy
SolarEdge Technologies MarketRank™ Stock Analysis
- Overall MarketRank™
- 89th Percentile
- Analyst Rating
- Reduce
- Upside/Downside
- 70.8% Upside
- Short Interest Level
- Bearish
- Dividend Strength
- N/A
- Environmental Score
- -1.01
- News Sentiment
- 0.38
- Insider Trading
- Acquiring Shares
- Proj. Earnings Growth
- Growing
See Full Analysis
Now, we’re some time away from that being the case with SolarEdge, but the technical conditions are there. There’s also the fact that the stock just got a double upgrade from the team over at Goldman Sachs. Having previously had SolarEdge rated a Sell, this week saw Goldman up their rating to a straight Buy. In a note to clients, they said SolarEdge “represents a unique recovery story, in our view, that could be poised to benefit from a ‘shrink-to-grow’ strategy starting in 2025.”
Alongside their bullish outlook for the stock, their fresh $19 price target will certainly get investors excited. Considering SolarEdge closed out Wednesday’s session below $14, that’s pointing to a targeted upside of nearly 40%. Not bad for a stock that’s already gained that much in the past month.
Why SolarEdge’s Turnaround Story Could Offer Big Rewards
Of course, when looking at a stock that’s lost so much value over the course of a year that saw the broader market cruise to multiple all-time highs, there’s always going to be a heightened degree of risk. By Goldman’s own admission, this upgrade “is likely a bit early,” but for investors with a taste for outsized gains, the risk/reward profile here is quite attractive. There’s a lot to like about the company’s ongoing restructuring efforts, which look set to get the company back to profit in the coming quarters. There’s also fresh leadership at the helm, with the announcement earlier this month of Shuki Nir stepping in as the new CEO.
It will be some time yet before SolarEdge is back trading at the lofty heights it spent much of 2021 and 2022 at, but who doesn’t love a good comeback story? If the stock is going to choose a place to begin a recovery rally, this is where it will happen, and with Goldman’s bullish outlook, I’m not sure you’d want to be betting against SolarEdge for much longer.
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