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Why SolarEdge Technologies Stock Glowed Only Faintly Today

What happened

It rarely does a stock much good to be, to paraphrase a memorable quote, damned with faint praise by an analyst. This was the dynamic behind the only slight rise in the price of SolarEdge Technologies (SEDG 0.62%) stock, which crept up by 0.6% on Tuesday. 

So what

Deutsche Bank prognosticator Corinne Blanchard launched coverage of solar stocks in a series of separate research notes. As a well-known title among that grouping, SolarEdge was included in that coverage.

However, it got some of the faintest praise among the clutch of stocks. In fact, Blanchard believes most of them are buys; out of the group of six, only SolarEdge and peer SunPower were tagged with hold recommendations. The remaining quartet — namely Sunnova Energy, Sunrun, Enphase Energy, and First Solar — received buy recommendations.

With SolarEdge, Blanchard said that its business could be buffeted by near-term headwinds. She wrote that, “We like the company’s diversified commercial product mix, but market has been focusing on execution and cost pressure this year, driving down stock performance versus peers.”

Now what

Despite this not-particularly bullish take on SolarEdge’s current status and the challenges it faces, Blanchard actually sounded an optimistic note or two on the company’s prospects.

In her research note, she wrote that those challenges leave “room for recovery over the next 6-12 months if management proves its ability to drive up performance despite a number of items weighting down on our investment thesis at this time.”

But such words are notably more muted than the positive reviews she gave the four peers that were tagged as buys. This provides a stark reminder for investors interested in the solar sector — there are quite a few companies on the market, and competition is rife. 


Eric Volkman has no position in any of the stocks mentioned. The Motley Fool recommends First Solar and SolarEdge Technologies. The Motley Fool has a disclosure policy.

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