What happened
For the second day in a row, a Wall Street analyst is cutting its price target on SolarEdge (SEDG 3.23%) stock. This morning, investment bank Piper Sandler sliced $12 off its target, predicting that SolarEdge stock will sell for just $328 a share a year from now -- even less than the $337 that JP Morgan predicted yesterday.
And yet, after back-to-back price target cuts, SolarEdge stock is up 11.4% in 11:15 a.m. EST trading today. What gives?
Image source: Getty Images.
So what
Well, at the risk of pointing out the obvious, have you seen where SolarEdge stock has been trading lately? After a three-week-long stock slide, SolarEdge shares closed down 27% from their recent peak yesterday -- just $246 and change. Indeed, even after this morning's surge in stock price, SolarEdge stock sits far below either of the two reduced price targets noted above, suggesting that -- if the analysts are right -- there's still considerable upside in SolarEdge shares.
And recognizing that fact, both analysts maintain "overweight" (i.e. buy) ratings on SolarEdge stock, albeit at lower price targets.
Now what
What will it take to move SolarEdge the rest of the way from today's gains to the price targets the analysts have set?
Both analysts cite rising interest rates as a headwind to further growth in SolarEdge stock, with JP Morgan adding that a "rotation" of investors out of growth stocks and into value stocks could also slow SolarEdge's rise. (SolarEdge, it must be remembered, costs more than 100 times earnings today, and is anything but a "value stock.")
Regardless, Piper Sandler believes that as the Biden administration moves forward with its infrastructure plans and green energy subsidies, investors will ultimately remember that there's a "positive medium/long term outlook" for solar stocks such as SolarEdge.
