Karishma Vanjani

SolarEdge stock was dropping early Wednesday after Citigroup analysts recommended selling shares of the solar energy company, citing deteriorating fundamentals in the European market. The move comes after SolarEdge announced its fourth round of layoffs in a year, slashing 400 jobs on Monday.

In a note on Wednesday, Citi's Vikram Bagri and team downgraded SolarEdge's stock to Sell from Neutral and placed a $9 price for target, which implies the stock nearly halves from its last close. Europe solar demand has been declining sequentially and the company hasn't increased its market share despite long-running promotions, Citi noted.

The stock fell 5.9% to $16.56 in premarket trading.

SolarEdge stock dropped 86% last year partly as higher interest rates and inflation pushed demand lower, keeping inventories high. It launched promotions worldwide, but more so in Europe to compete more effectively and clear inventory.

Still, market share in Europe has been stable at best, Bagri wrote, citing data from market intelligence firm, Sensor Tower. In 2025, SolarEdge assumes there'll be mid- to high single-digit overall price reductions year-over-year without accounting for promotions, while Europe sees double-digit reductions.

Citi's call comes less than a month after Goldman Sachs gave the shares a rare double upgrade to Buy, saying the market is overstating the risks.

To be sure, SolarEdge is one of the most shorted stocks in the S&P 500, meaning the market largely expects shares to decline. However, this also indicates that even a small positive update could lead to a sharp rebound.

Write to Karishma Vanjani at karishma.vanjani@dowjones.com.

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January 08, 2025 08:58 ET (13:58 GMT)

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