Oppenheimer raises the target price for Solaredge
solaredge
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opening:297
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. The company published solid reports in line with expectations. Oppenheimer said at first. The company maintains an impressive annual growth rate in revenues, over 50%, but suffers from continued pressure on the gross profit rate, resulting from a combination of supply chain challenges and the negative impact of the weak euro. Oppenheimer believes that these are short-term challenges, when the management of Solaredge is making efforts to solve the problems, at the same time as raising prices, in order to improve its gross profitability.
Oppenheimer maintains our “excess yield” recommendation while raising the target price from $334 to $400, and sees the potential to improve the gross profit rate by 4-5 percent, in addition to a surprise in the revenue line.
Oppenheimer raised its forecasts for the rest of the year regarding Solaredge – In accordance with the company’s forecast, we raise the revenue forecast for the years 2022-2024, but lower the profit forecast, due to the prolonged weakness in the gross profit rate. At the same time, we believe that in the long term the company will be able to overcome the challenges that plague its gross profitability, after operating a new plant in Mexico, which is expected to reach full production at the end of the year.
scenarios – In the base scenario, Oppenheimer expects that Solaredge will continue its activities in commercial and residential markets, the operating profit margin will return to double-digit margins, with sales of solar products reaching a margin of approximately 30% and continued penetration into the European market while taking a share from competitors.
In the positive scenario, Oppenheimer foresees a potential for cost reduction and thus the possibility of an increase in profits in the next two years, Solaredge’s energy storage products exceed expectations and grow above forecasts and finally, Solaredge is making substantial progress in introducing chargers for electric vehicles, solar companies, residential and commercial.
In the negative scenario, cost reductions turn out to be too aggressive and hurt solaredge growth, and also, a slowdown in the US economy’s consumption of solaredge products.
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