Bank of America: Significant valuation discount, upgraded SolarEdge rating to "Neutral"

Bank of America released a research report, upgrading solar technology manufacturer SolarEdge Technologies from "underperform" to "neutral" with a target price of $29. The reason is that the company's stock price reflects the "unlikely worst-case scenario," including inventory write-downs and the inability to monetize its balance sheet. Analyst Dimple Gosai stated that although the current valuation level looks attractive as the stock is near a five-year low due to weak residential demand, he is looking for a more viable path to profit margin and cash flow recovery before gradually becoming bullish on the stock. The company continues to face serious inventory issues in the European market, coupled with soft demand in the US, Gosai believes that the risks of channel inventory congestion and weak sales will persist for a whole year until SolarEdge returns to profitability in the first half of 2025. Gosai pointed out that the slowdown in inventory turnover leading to increased working capital, coupled with credit delays, highlights the complexity of managing cash, but the $300 million convertible bond should help alleviate recent concerns about the balance sheet