Bank of America: Significant valuation discount, upgraded SolarEdge (SEDG.US) rating to "Neutral"

Bank of America Corp released a research report, upgrading CECEP Solar Energy's technology manufacturer SolarEdge Technologies (SEDG.US) rating from "underperform" to "neutral" with a target price of $29, stating that the company's stock price reflects "unlikely worst-case scenarios" such as inventory write-downs and the inability to monetize its balance sheet. Analyst Dimple Gosai stated that although the current valuation levels appear attractive, with the stock nearing a five-year low due to weak residential demand, he is looking for a more viable path to profit margin and cash flow recovery before gradually becoming more bullish on the stock. The company continues to face severe inventory issues in the European market, coupled with soft end-market demand in the US. Gosai believes that the risks of channel inventory congestion and weak sales will persist for a full year until SolarEdge returns to profitability in the first half of 2025. Gosai noted that the slowdown in inventory turnover leading to increased working capital, along with credit delays, highlights the complexity of managing cash. However, the $300 million convertible bond should help alleviate recent concerns about the balance sheet.