Shares of SolarEdge Technologies (SEDG) dropped 17.07%, while those of Maxeon Solar (MAXN) fell 13.22% on Friday after Morgan Stanley downgraded both to Sell with a price target of $9 for SEDG (down from $23) and a price target of $4 for MAXN (unchanged). This was due to ongoing challenges in the clean energy sector.
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Uncertainty around the Inflation Reduction Act (IRA), tariffs, and rising interest rates have undoubtedly increased pressure on the industry, with Morgan Stanley also noting that clarity on the IRA might not come until the end of 2025.
Morgan Stanley analysts expect a tough road ahead for SolarEdge, thanks to declining demand in Europe and stiff competition from low-cost Chinese manufacturers. They also do not like the risks associated with SolarEdge’s upcoming 2025 debt maturity, which could lead to a liquidity crunch if poorly managed and further compound issues with weak demand and uncertain cash flow.
Maxeon Solar Also Faces Challenges
Maxeon Solar also faces challenges, such as $197M in new funding from Chinese firm TZE, which now holds a controlling stake. This could now complicate its ability to secure Department of Energy funding for its U.S. solar manufacturing plans, especially with potential shifts in U.S. policy under a new administration.
Indeed, the entire solar industry has been struggling on the stock market ever since Trump won the election. Trump has been very vocal about placing tariffs on imports, particularly those from China. And given that most of these companies have manufacturing operations in China, the higher prices are likely to hurt sales. It also does not help that Trump prefers to focus on increasing oil and gas output instead of clean energy.
Which Solar Stock Is the Better Buy?
Turning to Wall Street, out of the two stocks mentioned above, analysts think that SEDG stock has more room to run than MAXN. In fact, SEDG’s price target of $11.97 per share implies 12.5% upside versus MAXN’s nearly 60% downside risk.
