SolarEdge Technologies is poised to rally on a recent policy change in the U.S., so investors should embrace the stock, according to UBS. The investment bank upgraded the solar technology name to buy from neutral. It also hiked its price target on shares to $42 from $36, implying nearly 41% upside from Tuesday’s close. “SEDG is a key beneficiary of the U.S. Federal Communications Commission (FCC) ban on new inverter model imports,” analyst Jon Windham said Wednesday in a note to clients. “We anticipate the ban will create a supply- constrained U.S. market driving both share gains and potential pricing power for SEDG.” In late July, the U.S. Federal Communications Commission issued a ban on new power inverters, or a critical component of solar panels, that are produced abroad. The change is expected to affect about 50% of the U.S inverter market, prompting solar photovoltaic system manufacturers to purchase SolarEdge products, according to UBS data. “The ban likely creates a market opportunity for SEDG’s utility-scale inverter product (330kW TerraMax) which had seen limited market adoption prior to the ban,” Windham wrote. “Our upgrade is based on near-term share and pricing gain from SEDG’s existing commercially available inverter lineup.” UBS’ call goes against consensus on Wall Street. Of the 27 analysts covering SolarEdge Technologies, 20 have a hold on the stock, LSEG data shows. Shares have fallen roughly 58% over the past three months. The stock rose more than 5% in the premarket following the upgrade.
This solar stock is about to get a big boost from a change in U.S. policy, UBS says
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