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SolarEdge Stock Surges Another 11% on Earnings and Upgrades

By Jason Hall – Feb 20, 2020 at 6:19PM

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The solar power electronics maker follows a competitor's blowout quarter with one of its own.

What happened

Shares of SolarEdge Technologies (SEDG -5.96%) finished trading on Thursday up 11.25%. That makes two days in a row the renewable energy electronics manufacturer's stock delivered a double-digit gain.

Wednesday, SolarEdge shares climbed almost 18% after Enphase Energy (ENPH -1.59%), which makes similar components for the renewable energy industry, reported fourth-quarter results that far exceeded expectations. That caused Wall Street analysts to raise their price target for SolarEdge, which benefits from the same market conditions driving Enphase's results. 

Today's jump came after SolarEdge reported its own fourth-quarter results after market close Wednesday, crushing expectations and resulting in another analyst upgrade. 

So what

SolarEdge reported fourth-quarter revenue of $418 million and full-year sales of $1.43 billion. Quarterly revenue was up 2% from the third quarter and a massive 59% year over year, while full-year revenue jumped 52% from 2018. 

In addition to its sales volumes, SolarEdge also reported strong growth in profits and operating income, even as it ramps up spending to develop new business segments in energy storage and electric vehicle powertrain components. 

Man in suit throwing money towards the camera.

Image source: Getty Images.

There's more to SolarEdge's price jump in recent days: The company (along with Enphase) has been the target of a public short attack since mid-September, and about 13% of its shares were sold short at last count. Today's big jump (and yesterday's, too) is almost surely at least partly fueled by short-sellers buying stock to close out their positions. 

Now what

SolarEdge set first-quarter guidance of $425 million to $440 million, a strong start to the year, considering that first-quarter sales are often weaker than the year-end quarter due to a seasonal slowdown in installations that's typical for residential solar at the beginning of the year.

The company continues to benefit from (and take full advantage of) the change in U.S. electrical code that currently has it and Enphase operating as a near-duopoly in supplying the market. And while that situation won't last forever, as other manufacturers develop products to take advantage of the big demand, SolarEdge's management is putting the profits to work growing and diversifying the business. 

Moreover, solar demand is growing on a global basis, and that's only likely to accelerate. I'm not crazy enough to predict what the stock will do in the near term, but the business looks strong, and management is pulling the right strings to make it even stronger in the years ahead. 

Jason Hall owns shares of Enphase Energy, Inc. and SolarEdge Technologies. The Motley Fool recommends SolarEdge Technologies. The Motley Fool has a disclosure policy.

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Stocks Mentioned

SolarEdge Technologies Stock Quote
SolarEdge Technologies
$220.27 (-5.96%) $-13.97
Enphase Energy, Inc. Stock Quote
Enphase Energy, Inc.
$257.45 (-1.59%) $-4.15

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