SolarEdge Technologies traded sharply lower Wednesday after offering worse-than-expected sales guidance, underlining how the solar market's gloom hasn't cleared up just yet.
In results published late Tuesday, the manufacturer of solar inverters said it lost 92 cents per share on an adjusted basis in the December quarter, with sales of $316 million. That was better than the adjusted loss of $1.34 per share that analysts had forecast, but short of projections for $323 million in sales, according to FactSet.
For the same period a year earlier, SolarEdge earned an adjusted $2.86 per share. SolarEdge's fourth-quarter sales, meanwhile, fell 65% from the same period a year earlier.
SolarEdge's sales guidance for the current quarter also came in much lighter than anticipated. The company guided for revenue of $175 million to $215 million. Heading into the report, analysts were projecting SolarEdge would tally $374 million in sales for the March-ending period, according to FactSet.
On the stock market today, SolarEdge stock fell 12% to close at 74.14.
Slump Continues For SolarEdge
SolarEdge has been among the solar stocks hit hard over the past year by rising interest rates and weakened demand. Shares lost 67% in 2023. Late last year, SolarEdge was dropped from the S&P 500 as part of a portfolio rebalancing. In January, SolarEdge cut 900 jobs, or 16% of its workforce.
For the same period a year earlier, SolarEdge posted adjusted earnings of $2.86 per share on sales of $891 million.
"As reflected in our fourth quarter results and in the first quarter guidance released today, we continue to face challenges from general market dynamics," SolarEdge Chief Executive Zvi Lando told analysts on Tuesday.
Lando added that the company's challenges include an "abrupt slowdown in demand in the second half of 2023." Last October, SolarEdge published a warning for investors that it expected significantly lower sales for the back-half of 2023 in response to the slowdown, as well as an inventory destocking process.
UBS analyst Jon Windham wrote to clients that the company's first quarter revenue guide was "well below" expectations.
"The European market continues to deal with substantial inventory headwinds, with weaker end-demand in the U.S., in our view," Windham wrote. "We expect the inventory destocking process to continue throughout 2024."
Still, Windham upped his price target for SolarEdge stock to 75 from 70. He cited "increased clarity" on SolarEdge returning to quarter-over-quarter profitability improvements after the March quarter.
SolarEdge Stock: Technical Ratings
Prior to earnings, SolarEdge stock fell just under 1% to 84.42 in Tuesday trading. With Wednesday's drop, SEDG shares are down just under 20% so far this year and have lost 75% in the past 12 months.
SolarEdge is certainly not alone in its struggles. The Energy-Solar group tracked by IBD MarketSmith ranked as the worst overall performer among 197 industry categories for much of last year. The group is down a collective 7% so far on the year.
Coming into the report, SolarEdge stock had a meager IBD Composite Rating of 27 out of a best-possible 99, according to IBD Stock Checkup. The score combines five separate proprietary ratings into one rating to identify the strongest performing stocks.
Further, SolarEdge's IBD Relative Strength Rating was 7 out of 99. The rating compares a stock's price movement over the last 52 weeks with that of others in IBD's database. The best stocks typically score above 90.
On a more positive note, SolarEdge stock had an Accumulation/Distribution Rating of B- heading into earnings. That score indicates slightly more institutions are buying than selling shares.
