Solar Stocks Tumble as Demand Plummets
Solar stocks are getting hammered this morning after sector leader Enphase Energy warned that demand in Europe is weakening dramatically. This is just the latest blow to a sector that has already been reeling from exploding interest rates.
Goldman Sachs downgraded Enphase and cut its price target significantly following the company’s negative preannouncement.
Other solar stocks, including First Solar and Solaredge Technologies, are also trading sharply lower this morning.
Solar stocks are getting hammered this morning after sector leader Enphase Energy warned that demand in Europe is weakening dramatically. This is just the latest blow to a sector that has already been reeling from exploding interest rates.
Goldman Sachs downgraded Enphase and cut its price target significantly following the company’s negative preannouncement.
Other solar stocks, including First Solar and Solaredge Technologies, are also trading sharply lower this morning.
Solar Stocks Tumble as Demand Plummets
The solar sector has been red-hot for some time, but it took a beating on Friday morning. Sector leader Solaredge Technologies (SEDG) warned that demand in Europe is weakening dramatically, which tossed fuel on a fire already raging in the sector.
Interest rates have been exploding higher, and high interest rates are cited as one reason for the sector’s woes. Financing costs for panel installations have surged, and supply chain disruptions over the past year have put a kibosh on residential and corporate solar systems.
Array Technologies Inc (ARRY) manufactures and sells ground-mounted tracking systems used in solar energy projects. The company’s shares were down nearly 9% in early trading. First Solar Inc (FSLR) provides photovoltaic (PV) solar energy solutions in the United States, Chile, France, Japan, India, Canada, and elsewhere. Shares were trading almost 7% lower in early trading.
SolarEdge Technologies Inc (SEDG) designs, develops, and sells direct current (DC) optimizers and inverters systems for solar PV installations worldwide. It operates in two segments, solar and automotive. Shares of SolarEdge got hit with a double downgrade from Goldman Sachs on Friday. The warning of European weakness in the sector from Goldman Sachs analyst Brian Lee led to the downgrade. The company slashed its earnings guidance, and the stock was stunned in early Friday trading.
The Goldman Sachs research report said this: “We are downgrading shares of SolarEdge to Neutral and cutting our price target significantly following the company’s negative preannouncement for its second straight disappointing quarterly results/guidance. We find it hard to defend the stock given the underestimation of the effect of combining ongoing inventory end market demand margin issues like service headwinds on the stock’s forward multiple. Given the appearing significant deterioration in visibility, we cut our price target and believe a Neutral rating is warranted even despite the stock’s significant pullback year-to-date.”
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