Solaredge Technologies Inc (NASDAQ: SEDG) rallied nearly 30% in premarket today despite posting a not so encouraging release for its fourth financial quarter.
The smart energy solutions company said it lost $3.52 on a per-share basis in its recently concluded quarter, significantly above $1.50 a share of loss that experts had forecast.
Additionally, the firm’s guidance for $205 million in revenue for Q1 also fell slightly short of analysts at about $208 million.
Still, there’s reason to believe that Solaredge stock will extend its gains as we proceed through the remainder of 2025.
Solaredge stock could benefit from Trump tariffs
Solaredge could emerge as a key beneficiary of raised tariffs under the Trump administration.
Many expect higher tariffs to mean increased costs and lower profit margins for solar companies. What’s not being talked about enough, however, is how the new tariffs could weigh on foreign competition as well.
Trump tariffs could lead to a higher price tag on imported panels, effectively making products of domestic manufacturer like SEDG more competitive in the United States.
Plus, Solaredge stock is currently down more than 75% versus a year ago even after today’s run. So, the valuation is quite compelling for those interested in gaining exposure to the smart energy solutions market.
SEDG is quickly narrowing its losses
Another potential reason to remain bullish on Solaredge stock, and one that’s contributing significantly to its rally today, is the fact that it’s moving rather quickly towards profitability.
Solaredge may have lost a lot more than expected on a per-share basis in its Q4 – but the number ($3.52) was down massively from $15.78 a share of loss in the same quarter last year.
What’s also somewhat encouraging is that SEDG topped revenue estimates even though its loss came in well above Street estimates in the fourth quarter.
That said, Solaredge shares that are currently trading at a year-to-date high do not pay a dividend at writing and, therefore, remain unattractive for the income investors.
Is Solaredge stock worth buying today?
Solaredge investors could also take heart in the fact that the company returned to positive free cash flow in its fourth quarter and expects to remain free cash flow positive throughout 2025.
This is a solid indicator of financial health and operational efficiency.
Not everyone is convinced of SEDG’s potential, though. Following its quarterly earnings today, analysts at Truist Securities reiterated their “hold” rating on Solaredge stock and left their price target unchanged at $14, warning of potential downside of 35% from current levels.
Truist’s dovish view on Solaredge shares may also reflect its lack of confidence in Shuki Nir – an industry veteran who was promoted to the role of chief executive at SEDG in December 2024.
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