On Monday, Piper Sandler adjusted its outlook on SolarEdge Technologies (NASDAQ:SEDG), a company specializing in solar inverter technology and energy management. The firm reduced its price target on the stock to $73.00 from the previous $77.00 while maintaining a Neutral rating on the shares.
The decision to lower the price target was attributed to a revision in the long-term margin expectations for SolarEdge. The firm now anticipates long-term margins, excluding credits, to be around 26%, which aligns with the company's guidance midpoint. Previously, the margin forecast was set at 27%.
Piper Sandler's valuation of SolarEdge is based on a seven-year discounted cash flow (DCF) methodology. This approach to valuation considers the present value of projected future cash flows. The firm emphasized that despite the adjustment in price target, their discount rate used for the DCF analysis remains unchanged at approximately 10%.
The adjustment in the target price reflects a recalibration of expectations in response to the updated margin guidance provided by SolarEdge. Piper Sandler's continued Neutral stance indicates a view that the stock is currently valued in line with its market prospects, based on the analyst's financial models and industry benchmarks.
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