SolarEdge Technologies stock took a sharp decline in morning trading after the company issued disappointing third-quarter guidance. Despite beating adjusted earnings expectations for its second quarter update, the company fell short of revenue forecasts, reporting $991.3 million in revenue.
The major cause for concern is the company’s third-quarter predictions. SolarEdge expects revenue to be between $880 million and $920 million, significantly below Wall Street estimates. Analysts at Susquehanna attribute this weak guidance to an inventory buildup resulting from a drop in demand. Additionally, the company projects a decrease in battery shipments next quarter as they catch up with the previously high demand.
Despite the disappointing guidance, some analysts remain optimistic about SolarEdge stock. Guggenheim analysts acknowledge the weak forecast but still believe that SolarEdge is the best way to participate in distributed solar growth. They maintained their Buy rating but adjusted their price target to $290 from $400.
This trend of disappointing guidance is not exclusive to SolarEdge. Last month, competitor Enphase Energy also offered a weak revenue outlook for its third quarter, citing a buildup of inventory due to weak demand in the U.S.
2023 has proven to be a challenging year for solar stocks overall. Year-to-date, SolarEdge and Enphase stocks have declined by 29% and 46%, respectively.