SolarEdge(SEDG)2023-01-05 17:50Key Points Industry and Company * Company: SolarEdge Technologies, Inc. (NASDAQ: SEDG) * Industry: Solar inverters, energy storage, EV charging, and other clean technology solutions Core Views and Arguments * Demand Trends: * Strong demand across all markets: SolarEdge expects strong demand for solar inverters, energy storage, and other clean technology solutions in 2023. * Europe leading the way: Europe is experiencing significant growth driven by the energy crisis and high energy prices, leading to strong demand for solar and storage solutions. * U.S. growth expected but decelerating: The U.S. market is expected to grow, but at a slower pace compared to Europe. Factors such as net metering changes and higher interest rates may impact growth. * Asia remains strong: Asia, particularly Taiwan and Japan, continues to see strong demand for solar inverters and energy storage solutions. * Revenue Growth: * 50% year-on-year growth expected: SolarEdge expects revenue growth of approximately 50% in 2023, driven by strong demand and the expansion of its product portfolio. * Europe taking a larger share: Europe is expected to take a larger share of revenues in 2023, driven by strong growth in the region. * Supply Constraints: * Component shortages and manufacturing capacity constraints: SolarEdge faces challenges related to component shortages and manufacturing capacity constraints, which may impact its ability to meet demand. * Improving supply chain: SolarEdge is working to improve its supply chain and manufacturing capacity to address these challenges. * Battery Storage: * Strong growth expected in Europe: Battery storage is expected to see strong growth in Europe, driven by high energy prices and government support. * U.S. market facing challenges: The U.S. market faces challenges related to high battery prices and long payback periods, which may limit growth. * Inflation Reduction Act (IRA): * Potential for U.S. manufacturing: The IRA may provide opportunities for SolarEdge to expand its manufacturing footprint in the U.S. * Decision-making process: SolarEdge is currently evaluating its options for U.S. manufacturing, including working with contract manufacturers or building its own factory. Other Important Points * Gross margins: SolarEdge expects to achieve its target gross margin of 30% to 32% by the end of 2023. * Battery margins: SolarEdge targets a 25% gross margin for its battery storage solutions. * Exchange rates: The weaker euro is expected to have a positive impact on SolarEdge's gross margins. * New products: SolarEdge is launching a new utility-scale inverter and has acquired Hark, a company that provides IoT solutions for energy management.