Solar energy stocks have faced relentless pressure in recent months as U.S. tariffs have driven up import costs and squeezed margins. Non-American producers, in particular, have seen demand wane under the threat of steeper supply-chain expenses. 

Despite the industry’s current challenges, renowned investor Jeremy Grantham has taken a substantial position in SolarEdge Technologies (SEDG), holding a 10% stake, approximately 4.95 million shares in the company. Grantham’s investment comes at a time when SolarEdge, an Israeli-based solar inverter manufacturer, is grappling with the effects of U.S. tariffs and a general slowdown in solar demand.

However, there are indications that SolarEdge may be on the path to recovery after delivering solid first-quarter results.  This positive performance was driven by strong inverter shipments totaling 1,208 MW and battery shipments of 180 MWh. SolarEdge is actively implementing strategic initiatives to navigate the challenging market environment. The company is ramping up its U.S. manufacturing capabilities, aiming to mitigate the impact of tariffs and qualify for domestic content incentives under the Inflation Reduction Act.

If SolarEdge’s turnaround efforts gain traction, the stock could attract investors seeking exposure to renewable energy.

About SEDG Stock

Based in Herzliya, Israel, SolarEdge Technologies is a global clean energy company specializing in smart energy solutions. The company designs and manufactures inverter systems, energy storage, and monitoring platforms for residential, commercial, and utility-scale solar installations. It has a market cap of $1.2 billion.

Having lost most of its value in 2024 and early 2025, SolarEdge’s shares have surged over the past month, rising by more than 63% on the back of strong quarterly results and progress in tariff negotiations. Even so, the stock still trades approximately 63% below its 52-week high of $53.58.

Following the steep selloff, SolarEdge’s valuation has dropped to notably discounted levels. Its forward price-sales ratio now stands at 1.18x, representing a 60% discount compared to the sector median of 2.90x and a 74% discount relative to its own historical average of 4.61x.

SEDG Beats Q1 Earnings

After several challenging quarters, SolarEdge rebounded impressively on May 6, reporting a first-quarter performance that exceeded analysts’ revenue and earnings expectations and lifted its stock by 11% on the same day. The company reported revenues of $219.5 million, a 7.4% increase year-over-year, beating consensus forecasts by 7.7%. The U.S. remained SolarEdge’s largest market, accounting for 62% of sales ($132.1 million), followed by Europe at 22% ($47.4 million), and other regions at 16% ($32.6 million). 

On the bottom line, SolarEdge narrowed its adjusted net loss to $66.1 million or $1.14 per share, a nearly 40% improvement from the prior-year quarter.

Free cash flow turned positive for the second consecutive quarter at approximately $20 million, and cash plus short-term investments stood at $794 million as of March 31, 2025. 

Inventory remains elevated at $637 million as management works through channel backlogs. 

In Europe, early price-cut initiatives launched in November 2024 are starting to gain traction, particularly in Germany and the Netherlands, and battery attach rates climbed to 180 MWh, a meaningful uptick over recent quarters.

Looking ahead, SolarEdge is guiding Q2 FY25 revenues to $265 million to $285 million, roughly 10% above Street estimates. The company forecasts gross margins of 8%–12%, incorporating an anticipated 2-point tariff headwind. Non-GAAP operating expenses are forecast between $90 million and $95 million. 

What Analysts Expect for SEDG Stock?

Despite a strong quarterly performance, Wall Street sentiment remains cautious, with the consensus still leaning toward a “Hold.” Of the 28 analysts covering the stock, three rate it a “Strong Buy,” 16 recommend “Hold,” two have a “Moderate Sell,” and seven assign a “Strong Sell” rating.

While the stock recently surpassed its average price target of $15.83, the Street-high target of $38 implies it could still climb as much as 90% from current levels.

The Bottom Line

SolarEdge appears to be on the road to recovery. Management anticipates breaking even on free cash flow for the full year, which should enable them to service a $350 million convertible note due September 2025 while preserving a net cash position against remaining debt. The current valuation also presents a compelling entry point for investors.

Given these factors, SolarEdge seems well-positioned to navigate near-term headwinds and capitalize on long-term growth in solar demand.