Stop Loss for SolarEdge
We’re issuing a Stop Loss recommendation for SolarEdge at $16 for half your shares.
Our reasoning: SolarEdge continues to trade lower despite beating estimates by $.04 Tuesday and issuing solid guidance. Revenue grew 27% and earnings were up 42%. Although 2017 estimates have come down since my original recommendation, the stock price reflects much worse numbers. CEO Sella responded to all market fears on the conference call. He noted that Tesla is still shipping all batteries with the SolarEdge inverter and believes it would take Tesla several years to develop a replacement. SolarCity, who Tesla is buying, accounts for less than 10% of SolarEdge’s revenue. He noted the company has not engaged in a price war and stable profit margins backed up this claim. I still like the fundamentals on this stock and the valuation is a bit crazy. It trades for 8 times 2017 estimates and holds $3.00 per share in cash.
However, I appreciate that many subscribers have lost a significant amount of money in this stock and I do not want them to suffer further. I recommend putting a stop loss at $16 on the stock. This means if it drops to $16, I would sell half your position and then wait a bit. I do believe the stock will be higher in six months but have been wrong and surprised by the stock action to date despite being fairly accurate on its fundamentals.