SolarEdge(US:SEDG)2024-02-20 16:00Investment Rating - The report maintains a cautious outlook on SolarEdge Technologies, indicating that the company's performance in Q4 2023 is expected to be viewed negatively by the market, with a non-GAAP net loss of $52.5 million, compared to a consensus loss of $76.8 million [5][6]. Core Insights - The residential solar market in Europe is anticipated to bottom out in Q1 2024, with a gradual improvement expected in solar installations throughout the year, although the commercial solar market is viewed more optimistically [1][5]. - The company's Q1 2024 revenue guidance is significantly below market expectations, with projected revenues of $175 million to $215 million, while the market anticipated $373 million [6][7]. - SolarEdge plans to initiate a stock buyback of $300 million starting in Q1 2024, which will be conducted judiciously [2]. Summary by Sections Financial Performance - In Q4 2022, the company reported net revenue of $890.7 million, which is expected to decline to $316 million in Q4 2023, reflecting a 65% year-over-year decrease [4]. - The gross profit for Q4 2023 is projected to be negative at -$56.5 million, a significant drop from $261 million in Q4 2022 [4]. - The company’s adjusted diluted earnings per share (EPS) based on GAAP is expected to be -$2.85 for Q4 2023, compared to $0.35 in Q4 2022 [4]. Market Outlook - The report suggests that the U.S. residential solar market dynamics will not change until interest rates decline, while the commercial solar market outlook remains relatively positive [1][5]. - The company expects a gradual recovery in solar installations throughout 2024, with Q2 2024 revenue running rate projected at $600 million to $650 million and gross margins recovering to 30-32% [6][7]. Liquidity and Inventory - SolarEdge anticipates that 2024 will be a cash-rich year starting from Q2, despite acknowledging that most of its revenue will come from inventory sales, which currently stands at a record $1.44 billion [8].