SolarEdge Technologies (NASDAQ:SEDG) announced a restructuring plan to focus on cost reduction, including personnel layoffs. The move comes amid a slump in the company’s sales due to adverse market conditions. The company provides inverter solutions, power optimizers, and a monitoring platform.
As part of the restructuring plan, SolarEdge will lower its global workforce by approximately 16%, or about 900 employees. This follows the company’s initiatives to lower its cost structure, including discontinuing manufacturing operations in Mexico, terminating its light commercial vehicle e-mobility activity, and reducing manufacturing capacity in China.
It’s worth highlighting that SolarEdge is struggling to lift its sales as macro headwinds slowed residential demand and led to a high inventory buildup in the distribution channels. An increase in inventory, pressure on pricing, and increased competition are taking a toll on its financials. SEDG’s top line recorded a sequential and year-over-year decline of 27% and 13%, respectively, in Q3. Further, its Q4 revenue outlook represents a significant year-over-year decrease of 61-66%.
Is SolarEdge a Buy or Sell?
SolarEdge stock dropped nearly 78% over the past year due to softness in demand and inventory issues. Despite this notable correction in its share price, Wall Street remains sidelined on SEDG stock.
The stock has a Hold consensus rating based on six Buys, 17 Holds, and four Sell recommendations. Analysts’ average price target of $88.85 implies 28.56% upside potential from current levels.
