SolarEdge raised to overweight at Barclays on Europe opportunity

By Senad Karaahmetovic

Barclays analysts upgraded SolarEdge (NASDAQ:) stock to Overweight from Equal Weight, citing the company’s pivot toward Europe. The analysts also hiked the price target to $396 from the prior $389 per share.

According to the analysts, four factors support the SEDG upgrade move:

1. The company’s pivot towards Europe in preparation for better growth there vs. the U.S.;
2. Higher battery deployment as it has prioritized self-consumption markets;
3. Larger presence in the Tier 1 market in the U.S., which will likely take back some market share from the smaller tiers, and
4. Gross margin expansion as the Mexico facility ramps up and the strength in the dollar reverses course.

The analysts are also optimistic on SEDG after visiting Europe, specifically the Netherlands and Germany. Many solar customers pointed towards “massive spikes in electricity bills.”

“This has reduced the payback periods to 2.5 years for a solar-only system in Germany and 4-5 years in the Netherlands, marking it one of the best investments a homeowner could make in the current backdrop, and recession-proof, in our view. We expect this acceleration in demand to continue as the remaining fixed power contracts (that were signed pre-energy crisis) roll off through 2023,” they wrote in an upgrade note.

Solaredge shares are up almost 17% year-to-date.

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