Technology
Prediction: This Tech Stock Will Be the Best Performer the Rest of 2024
Published:
24/7 Wall St. Insights
- Analysts have not given up on tech stocks. In fact, expectations are high for some stocks in the coming year.
- One stock stands out, but the question for investors is why.
- Also: Discover the next Nvidia.
The mega tech stocks, including the Magnificent 7, have largely been driving the bull market over the past couple of years. But all good things do come to an end. These big tech stocks have taken a beating recently. At the same time, the markets are undergoing a big rotation into small cap stocks. Analysts, of course, have not given up on tech stocks. In fact, here are some of the tech stocks for which analysts have big expectations.
| Stock | Mean Target | Upside |
| GigaCloud Technology Inc. (NASDAQ: GCT) | $53.12 | 86.3% |
| Ibotta Inc. (NYSE: IBTA) | $120.56 | 82.4% |
| IonQ Inc. (NYSE: IONQ) | $14.70 | 84.7% |
| Pagaya Technologies Ltd. (NASDAQ: PGY) | $25.63 | 80.6% |
| Shoals Technologies Group Inc. (NASDAQ: SHLS) | $11.72 | 78.1% |
| SolarEdge Technologies Inc. (NASDAQ: SEDG) | $51.35 | 91.6% |
Topping that list is SolarEdge, as analysts anticipate the share price will almost double in the coming year. Does that mean the stock is undervalued? Or is this a case of one overzealous analyst?
Why Invest in SolarEdge?
SolarEdge stock is up more than 23% from its 2015 IPO share price, despite a recent retreat. The company revolutionized the solar industry with game-changing innovations that improve energy efficiency and maximize production. About two-thirds of employees would recommend working at SolarEdge Technologies to a friend, and a little over half have a positive outlook for the business, according to Glassdoor. Shares traded as high as about $390 per share in late 2021. The stock retreated in spring of 2023 and hit an all-time low of $23.51 recently. Investors now have to decide whether the stock has reached a bottom and is poised to truly rebound.
SolarEdge, the Company
The company designs, develops, manufactures, and sells direct current (DC) optimized inverter systems for solar photovoltaic (PV) installations in the United States, Europe, and elsewhere. It operates in two segments.
The Solar segment offers power optimizers, inverters, batteries, storage solutions, electric vehicle chargers, smart tracking solutions, and smart energy management software products.
- Its Monitoring platform is a cloud-based monitoring platform, which collects power, voltage, current, and system data sent from inverters and power optimizers.
- Its MySolarEdge app enables system owners to track their real-time system production and household energy consumption.
- The Designer platform is a web-based tool that helps solar professionals to plan, build, and validate residential and commercial systems.
- The Mapper application is for registering the physical layout of new PV sites installed with DC-optimized inverter systems.
- Its SetApp application activates and configures inverters.
The Energy Storage segment provides lithium-ion cells and containerized battery systems (BESS) solutions for commercial, industrial, and utility markets; modules and racks; purpose-built components and solutions, and hardware and software tools; and pre- and post-sales engineering support for designing, building, and managing battery and system solutions. The company offers e-mobility products, automated machines, and UPS products, as well as pre-sales support, ongoing training, and technical support and after-installation services.
The company sells its products through solar installers and distributors, electrical equipment wholesalers, and PV module manufacturers, as well as engineering, procurement, and construction firms.
SolarEdge is based in Herzliya, Israel. The company was founded in 2006, and it went public in March of 2015. Competitors include Enphase Energy Inc. (NASDAQ: ENPH), Tesla Inc. (NASDAQ: TESLA), Huawei, and others.
SolarEdge recently said it would cut 400 jobs. The company appointed a new chief marketing officer and named a successor to its chief financial officer, who departs soon. It acquired an EV charging firm earlier this year. And it posted a net loss and declining revenue for the first quarter. The second-quarter report is due in early August. Bank of America has called it the best of breed.
SolarEdge, the Stock
Despite being up 9% or so in the past month, the share price is still more than 88% lower than a year ago. The S&P 500 is up about 19% year over year. Note that the $51.35 consensus price target is well above the current share price but far below the 52-week high.
Analysts on average recommend holding shares. Recently, Cantor, BofA Securities, Piper Sandler, and Susquehanna reiterated their Neutral ratings, while J.P. Morgan reiterated an Overweight rating. Institutional investors hold about 97% of the shares. BlackRock has almost a 15% stake, and Vanguard and Goldman Sachs also hold shares. Note that almost 57 million shares, or more than 30% of the float, are held short.
Wall Street expectations for where the stock goes in the next 52 weeks vary. While at least one analyst anticipates notable downside, the highest price target indicates a huge gain in the share price. The consensus projection signals big upside as well, suggesting that it’s probably not just one overenthusiastic analyst.
| Low target | $24.00 | −10.9% |
| Mean target | $51.35 | 90.7% |
| High target | $300.00 | 988.1% |
With the stock not far off an all-time low, what’s with the overall enthusiasm for the stock? Billions of dollars of investment in clean energy supported by the Inflation Reduction Act is expected to mean continued demand, regardless of the outcome of the presidential election. Falling interest rates will also improve macro conditions. That all means a boost for the likes of SolarEdge and suggests its stock could be a bargain now.
On the other hand, the European residential solar market is not expected to grow for a few years. And SolarEdge, which is not currently profitable, also faces plenty of competition, especially in Europe. Both Enphase and Tesla have more access to capital. So, SolarEdge does face some risks.
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