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SolarEdge Technologies (NASDAQ:SEDG) -21.7% in Tuesday’s trading, on pace for its lowest close in nearly seven years, after disclosing a customer that owes it $11.4M has filed for bankruptcy and may not be able to repay the full amount.
Other solar names also trade lower, including JinkoSolar (JKS) -7.7%, Sunnova Energy (NOVA) -7.1%, Maxeon Solar (MAXN) -5.6%, Enphase Energy (ENPH) -5.4%, Sunrun (RUN) -5.1%, Canadian Solar (CSIQ) -4.1%, SunPower (SPWR) -3.4%, Array Technologies (ARRY) -2.1%, First Solar (FSLR) -2%.
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SolarEdge (SEDG) shares have now plunged 49% in June, on track for its worst month ever, and has dropped 73% YTD.
While reaffirming Q2 revenue guidance, SolarEdge (SEDG) also said it expects negative free cash flow of ~$150M in the current quarter ending June 30, due to “higher than expected working capital related to the ramp of U.S. manufacturing and a slower pace of payments on accounts receivable.”
Truist analyst Jordan Levy, who rates SolarEdge (SEDG) as a Hold with a $60 price target, says the “negative FCF guide likely represents another proof point of continued market challenges/inventory overhangs.”
The company also said it plans to offer $300M of convertible senior notes in a private offering.
BMO Capital’s Ameet Thakkar, who rates the stock at Market Perform with a $56 PT, says the convertible debt offering raises more questions than answers, noting SolarEdge (SEDG) said on its Q1 earnings call that “…we already expect to see cash generation in Q2, and we’re going to see intensified generation into Q3 and Q4, where not just that we will have higher revenues, we will also have higher utilization of the inventory.”