Key Takeaways
- On February 27, SolarEdge (SEDG) declined 9.5% to close at $36.57, trading on approximately half its typical volume.
- The solar industry experienced significant losses, with Sunrun plummeting 35%, Array Technologies sliding 34%, and Shoals Technologies dropping 31% following quarterly results.
- Industry-wide margin compression from tariffs and reduced federal incentives for residential solar installations are creating headwinds.
- While SolarEdge exceeded Q4 EPS and revenue projections, the company continues operating at a loss with a -34.2% net margin.
- Wall Street maintains a “Reduce” rating on SEDG with a consensus price target of $27.28 — significantly below current levels.
Shares of SolarEdge Technologies (SEDG) experienced a sharp decline of 9.5% on February 27, ending the session at $36.57 compared to the previous close of $40.40.
SolarEdge Technologies, Inc., SEDG
Trading activity was notably subdued — approximately 1.57 million shares changed hands, roughly half the company’s 3.16 million daily average.
The decline wasn’t isolated to SolarEdge. Solar stocks experienced widespread carnage throughout the week.
Sunrun collapsed 35% following its earnings release. Array Technologies plunged 34%. Shoals Technologies tumbled 31%. First Solar retreated 14%. The Invesco Solar ETF posted an 8% weekly loss — marking its steepest five-day decline since June.
This broad-based weakness signals genuine structural challenges confronting the sector, not merely temporary market volatility.
Tariff-related cost pressures are compressing profitability at First Solar, Array, and Shoals, with all three companies highlighting these issues during recent earnings discussions. Modifications to federal energy policy have diminished consumer incentives, while demand for residential solar installations continues softening.
According to Wood Mackenzie’s projections, U.S. residential solar installations are expected to contract by 18% in 2026.
Sunrun’s quarterly results confirmed this deteriorating trend. The company reported 17% fewer new subscribers in Q4 2025 compared to the same period in 2024, while the net value per customer acquisition decreased 30% during the quarter. The company’s 2026 outlook further dampened investor enthusiasm — Jefferies analyst Julien Dumoulin-Smith downgraded shares to Hold from Buy, anticipating “a more prolonged period of market contraction.”
First Solar’s Backlog Reveals Concerning Trends
First Solar’s project backlog decreased to 50.1 gigawatts by year-end 2025, down from 68.5 gigawatts at the beginning of the year.
Contract cancellations and terminations exceeded new bookings during the quarter — representing the seventh straight quarter of sequential backlog deterioration, according to Raymond James analyst Bobby Zolper.
Zolper observed that guidance for 2026 and 2027 fell approximately 15% short of previous expectations across key metrics including shipment volumes, sales, and EBITDA. He maintained a Market Perform rating, stating he would prefer to “wait out the near-term negatives.”
SolarEdge Delivered Better-Than-Expected Results
Notwithstanding the share price decline, SolarEdge actually surpassed analyst expectations for Q4. The company posted an EPS loss of $0.14, outperforming the anticipated loss of $0.19. Revenue reached $333.8 million, exceeding the $330.33 million consensus estimate and representing 70.9% year-over-year growth.
However, profitability remains elusive. The company’s net margin stands at -34.2% with return on equity at -45.5%.
Wall Street sentiment toward SEDG remains predominantly bearish. Current consensus stands at “Reduce,” comprising one Buy rating, 16 Hold ratings, and seven Sell ratings. The average analyst price target of $27.28 sits below the stock’s current trading range.
Recent analyst actions include Deutsche Bank reducing its price target from $35 to $33 with a Hold rating on February 20, while Morgan Stanley increased its target from $33 to $40 with an Equal Weight rating on February 19.
The stock’s 50-day moving average stands at $33.76, with the 200-day moving average at $34.19. SEDG maintains a market capitalization of approximately $2.06 billion and exhibits a beta of 1.66.
Institutional ownership accounts for 95.1% of outstanding shares.
