Solar Stocks: A Tale of Two Companies
As the solar industry continues to evolve, two key players are making headlines. Goldman Sachs analyst Brian Lee has revised his ratings for SolarEdge Technologies, Inc. (NASDAQ:SEDG) and Canadian Solar Inc. (NASDAQ:CSIQ), citing a disconnect between mid-to-long-term fundamentals and valuations heading into 2025.
A Brighter Outlook for SolarEdge
Lee upgraded SolarEdge Technologies’ rating to Buy from Sell, raising the price target to $19 from $10 prior. This move comes after a challenging period for the company, marked by a tough U.S. residential solar market and weaker European demand. However, the analyst believes estimates have bottomed, and concerns about SEDG’s $350 million debt in 2025 are overstated. Recent cost-cutting measures, including headcount and facility reductions, have strengthened the outlook. Lee sees a turnaround on the horizon, driven by improved cost control and a better product mix. He estimates FY25 as a key inflection point, with growth likely accelerating in FY26.
Canadian Solar Faces Headwinds
On the other hand, Lee downgraded Canadian Solar Inc.’s rating to Sell from Neutral, cutting the price target to $11 from $14 prior. The analyst’s negative outlook stems from policy risks under the Trump administration and tariffs on solar imports from Southeast Asia. As a major foreign supplier of solar panels to the U.S., CSIQ is highly exposed to these risks, which will impact its margins. The analyst also sees consensus estimates as overly optimistic, with 2025-2026 EBITDA projections 35% – 40% below the Street’s.
Market Reaction
SEDG shares surged 23.3% to $15.19, while CSIQ shares edged up 0.86% to $11.76. The market’s reaction reflects the divergent outlooks for these two solar stocks.
Key Takeaways
- SolarEdge Technologies is poised for growth amid cost cuts and a better product mix.
- Canadian Solar faces headwinds due to policy risks and tariffs on solar imports.
- The analyst sees FY25 as a key inflection point for SolarEdge, with growth likely accelerating in FY26.
- Consensus estimates for Canadian Solar are overly optimistic, with EBITDA projections revised down by 6% to $688 million.
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