SolarEdge Technologies Stock is a Secular Solar Tailwinds Benefactor

Solar energy inverter systems solutions provider SolarEdge Technologies NASDAQ: SEDG stock had a volatile 2021 as shares fell (-30%) off its $377 highs made in January 2021. The Company makes smart inverters for photovoltaic (PV) systems for residential and commercial buildings, electric vehicle (EV) charging complete with a mobile smart app to monitor every aspect in real-time. Their smart energy solutions maximize power generation while lowering the cost to produce energy. As the leading global maker of PV inverters, the Company has shipped over 24 Gigawatts of systems worldwide from over 2 million monitored systems in over 133 countries. SolarEdge is a benefactor of the global decarbonization movement and the Biden Administration’s clean energy initiatives including the extension of the Federal solar investment tax credit (ITC) rate of 26% through 2023. Risk tolerant investors seeking exposure in the clean and renewable energy space can monitor shares for opportunistic pullbacks.        

Q1 2021 Earnings Release

On May 3, 2021, SolarEdge released Q1 2021 results for the quarter ending in March 2021. The Company reported earnings per share (EPS) of $0.98 excluding non-recurring items, versus consensus analyst estimates for a profit of $1.02, a (-$0.04) miss. Revenues rose 6% year-over-year (YoY) to $405.5 million, beating analyst estimates for $395.73 million. Solar products revenues were $376.4 million, up 15% YoY. The Company shipped out 1.69 Gigawatts of AC inverters. The Company had $1.2 billion in liquidity at the end of the Q.

Q2 2021 Raised Revenue Guidance

SolarEdge bumped up guidance for Q2 2021 with revenues expected to come in between $445 million to $465 million versus $446.37 million. Revenues from solar products are expected to come in between $405 million to $420 million.

Conference Call Takeaways

SolarEdge CEO, Zvi Lando, set the tone, “This quarter, we shipped out 3.7 million power optimizers and 182,000 inverters. Our Solar business grew this quarter across all segments and geographies, including record quarterly revenues in Australia, Italy, and France. In North America, we saw a 23% growth in revenues from Q4 to Q1, representing increased demand for both residential and commercial products.” The Company saw 50% sequential quarterly growth in Australia with nearly 100 megawatts of products delivered. He continued, “When it comes to new market opportunities, we see Korea as a particularly interesting one. We recently completed certification of our three-phase commercial inverter for installation on commercial rooftops in Korea. As the C&I market in Korea is more than 2 Gigawatt in size and considering our strong local presence, we are optimistic of the growth potential there.” SolarEdge already installed more than 10 megawatts of rooftops in a conditional certification set-up.

CEO Lando expects to see “meaningful” signs of recovery in all commercial geographies as megawatts shipments grew 35% sequentially. The Company expects commercial segments to grow back to pre-pandemic levels in the second-half of 2021. The Company is also on track to start shipping out initial shipments of the residential batteries this quarter. This come after completing testing through active U.S. sites to validate in-field battery performance and sharpen installation practices. The Company should start to see meaningful revenues from Q3 2021 forward.

Non-Solar Business

Non-solar revenues were $29.1 million for the quarter. The Company’s e-Mobility Division began delivering full powertrain units and batteries for the Fiat E-Ducato this quarter. The Sella 2 factory for lithium-ion cells and batteries in Korea is expected to start pilot production in H1 2022. This will enable the Company to supply its own cells to reduce dependency on third-party manufacturers.

SEDG Opportunistic Pullback Levels  

Using the rifle charts on weekly and daily time frames provides a broader view of the landscape for SEDG stock. Keep in mind, this is an expensive stock, so the slippage is common. The weekly uptrend peaked near the $375.24 Fibonacci (fib) level. Shares have been in down trending since the weekly market structure high (MSH) triggered on the breakdown under $281.83. The falling weekly 5 period moving average (MA) is at $249.91 with lower weekly Bollinger Bands (BBs) at $193.35. The weekly stochastic is attempting to bottom out and cross back up off the 20-band. The weekly market structure low (MSL) buy triggers above $262.82. The daily rifle chart is uptrending with a rising 5-period MA at $235.01 powered by the bullish stochastic mini pup with upper BBs at $312.53. Risk-tolerant investors can monitor for opportunistic pullback levels at the $236.98 fib, $232.66 fib, $222.38 fib, $207.68 fib, $201.61 fib, $195.60 fib, and the $189.66 fib. The upside trajectories range from the $284.71 fib up towards the $350.01 fib level. Keep an eye on peer solar stocks FSLR, SPWR and SUN as they tend to move as a group.