On Monday, Canaccord Genuity (TSX:CF) maintained a Hold rating on shares of SolarEdge Technologies (NASDAQ:SEDG) with a steady price target of $38.00. SolarEdge has announced a workforce reduction of an additional 400 employees, which includes 200 positions in Israel. This cut represents 8.5% of the company's total workforce and follows an earlier reduction six months ago that affected about 900 employees.
Since the start of the year, SolarEdge has decreased its workforce by roughly 23%, or 1,300 employees, due to a challenging market for rooftop solar installations and a slowdown in electric vehicle (EV) charging unit demand.
The company's CEO, Zvi Lando, conveyed the decision in a note to employees, explaining that the need for further layoffs was due to an overly cautious approach in the previous round of cuts and a sustained period of high inverter inventory levels.
Despite these workforce reductions, Canaccord Genuity projects an improvement in rooftop solar installation rates in the second half of 2024 to early 2025, contingent on potential Federal Reserve interest rate cuts in September.
Canaccord Genuity anticipates a revenue rebound for SolarEdge, forecasting $450 million in the third quarter and $531 million in the fourth quarter of 2024. However, the firm also expects it will take at least two to three quarters to clear the excess sales channel inventory, noting that inverter shipments in the first quarter of 2024 were down 75% year-over-year to approximately 900k MW.
The analyst firm acknowledges SolarEdge's efforts to ramp up U.S. production to capitalize on manufacturing tax credits from the Inflation Reduction Act (IRA). However, it also notes that the workforce reductions could potentially hinder the company's ability to quickly respond to a demand recovery if interest rates are cut more aggressively in 2025. Despite these factors, Canaccord Genuity is not altering its current rating or price target for SolarEdge Technologies.
In other recent news, SolarEdge Technologies has made significant strides in various areas. The company announced a plan to lay off 400 employees as part of an effort to increase profitability. Concurrently, SolarEdge secured $37 million through the issuance of convertible senior notes due 2029, a move led by Goldman Sachs & Co (NYSE:GS). LLC.
These developments follow a series of adjustments by financial firms. BofA Securities upgraded SolarEdge's stock rating to Neutral, citing a recent decline in stock price. However, Wells Fargo (NYSE:WFC) reduced the price target on SolarEdge shares to $29, maintaining an Equal Weight rating due to an anticipated decrease in demand.
In addition to these financial maneuvers, SolarEdge has been selected by Rutgers University for a research program investigating the benefits of agrivoltaics. The company also announced the appointment of Shuki Nir as its new Chief Marketing Officer.
Despite a projected free cash flow shortfall of $150 million, GLJ Research and Oppenheimer maintained their Buy and Perform ratings respectively. These are the latest developments for SolarEdge Technologies.
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