SolarEdge, Enphase, First Solar Stock Crushed as Solar Demand Plummets

Investing

Published: October 20, 2023 10:54 am

Last Updated: October 20, 2023 3:24 pm

The once red-hot solar stock sector is getting mauled this morning. This came after a sector leader warned that demand in Europe has weakened dramatically. That tosses more fuel on a fire that has already been raging in the sector.

Interest Rates Explode

High interest rates are being cited as one reason for the sector’s woes. Financing costs for panel installations have surged, and supply chain disruptions over the past year have put the kibosh on both residential and corporate solar systems.

Array Technologies Inc. (NASDAQ: ARRY) manufactures and sells ground-mounting tracking systems used in solar energy projects in the United States, Spain, Brazil, Australia and elsewhere. The stock was last seen at $17.64 down 2%

Enphase Energy Inc. (NASDAQ: ENPH) designs, develops, manufactures and sells home energy solutions for the solar photovoltaic industry in the United States and internationally. Shares were down almost 14% at $100.27 in early trading.

FirstSolar Inc. (NASDAQ: FSLR) provides photovoltaic (PV) solar energy solutions in the United States, Chile, France, Japan, India, Canada and elsewhere. Shares traded down almost 2% in the early trading.

SolarEdge Technologies Inc. (NASDAQ: SEDG) designs, develops and sells direct current (DC) optimized inverter systems for solar PV installations worldwide. It operates in Solar and All Other segments.

Big Wall Street Downgrade

SolarEdge got a double downgrade from Goldman Sachs on Friday after warning about European weakness in the sector. Goldman Sachs analyst Brian Lee cut the shares from Buy to Neutral after the company slashed earnings guidance. The stock was down a stunning 29% in early Friday trading at $81.71, after closing at $113.98 on Thursday.

The Goldman Sachs research report said this:

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We downgrade shares of SolarEdge to Neutral and cut our estimates and price target significantly following the company’s negative pre-announcement. After a second straight disappointing quarter of results/guidance, we find it hard to defend the stock: we underestimated the effects of the combination of ongoing inventory, end market demand, and now margin issues that are likely to serve as headwinds for the stock for the foreseeable future given what appears to be a significant deterioration in visibility. We cut our 12-mo price target to $131 (from $254) and believe a Neutral rating is warranted, even despite the stock’s significant pullback year-to-date.

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