Investing.com — Citi analysts downgraded SolarEdge Technologies (NASDAQ:) to a Sell rating on Wednesday, citing concerns over the company’s liquidity, challenging earnings outlook, and intense competition.
The downgrade is said to reflect broader issues facing the residential solar sector, which Citi remains cautious about due to its heavy dependence on incentives and relatively weaker financial flexibility.
“SEDG faces stubbornly high Opex despite the restructuring announcements, especially relative to demand,” the Citi note states.
They add that recent price reductions have failed to drive market share gains, according to app data cited by the analysts.
Citi highlights that utility-scale companies are better positioned, benefiting from achievable consensus estimates, stronger balance sheets, and robust demand from datacenter and AI sectors.
However, SolarEdge’s tight liquidity and competitive pressures make it vulnerable in the current market environment.
In contrast, Citi upgraded Hannon Armstrong (NYSE:) Sustainable Infrastructure Capital to Buy, praising its structured preferred investments and insulation from potential policy changes.
“HASI’s combination of structured preferred investments and insulation from potential policy changes makes it an attractive opportunity to navigate this uncertain environment while getting paid a 6% yield,” the analysts note.
Citi’s outlook for the broader alternative energy equipment and services sector remains mixed, with positive views on companies like Shoals Technologies due to upside in consensus revenue estimates. However, bearish views prevail for Generac Holdings (NYSE:) and Array Technologies, citing potential revenue headwinds and margin pressures.
The analysts also warn of potential policy changes under a possible Trump administration, noting that increased protectionism via tariffs could benefit companies like First Solar (NASDAQ:).
