索拉能源科技

We will discontinue analyst coverage of SolarEdge on or about May 11, 2026. 

We provide analyst research and ratings on over 1,600 companies globally and periodically adjust our coverage according to investor interest and staffing.

We are increasing our fair value estimate for SolarEdge to $36 from $32 following third-quarter earnings. The primary driver behind our valuation increase is slightly higher long-term margins.

Our valuation is primarily underpinned by continued growth in the company’s solar business and its energy storage segment. We forecast solar volumes to average mid-single-digit annual growth over the longer term, following sharp declines in 2024 due to excess inventory. We expect continued declines in average selling prices, forecasting mid-single-digit annual declines in the longer term, following much steeper pricing declines in 2024, given industry oversupply.

We forecast gross margins for the company's core solar offerings in the mid-to-high 20% range over the long term, a rebound from 2025 levels but below the mid-30% range historically.

We project rapid growth in the company’s storage business as the industry is in its early days. We see the residential storage market growing by 3 times by 2027 from 2024 as consumers increasingly pair solar and storage for reliability and economic reasons. While volume growth is robust, we do forecast relatively steep declines in average selling prices as supply constraints begin to alleviate. We expect storage gross margins to be below solar inverter gross margins in the long term, given greater competition.

We assign a no-moat rating to SolarEdge, as we don’t have enough confidence that its current excess profits will last beyond 10 years, the threshold to justify a narrow moat rating.

Many components of the photovoltaic solar value chain have been commoditized as the industry has matured. Solar module firms, for example, are notorious for failing to achieve returns equal to or above their cost of capital. Inverters are a similar story, but the market is bifurcated between rooftop and utility-scale applications. Utility-scale inverters have been commoditized as project developers compete on largely one thing: price. To date, we have seen residential inverter suppliers (particularly in the United States) show the ability to earn excess profits. Our concern is regarding the duration of this profitability.

We do not believe SolarEdge has a moat based on its intellectual property. While SolarEdge devotes 8%-10% of its sales to research and development, we don’t believe this has created a large enough gap relative to its competitors. For example, competitors such as SMA Solar and Huawei have released products that are very close substitutes to SolarEdge’s. In addition, the company typically unveils a new product generation every two to three years, which we do not view as prohibitively long. Further, many features can typically be replicated by competitors in relatively short order.

SolarEdge’s solar inverter business is well diversified by end market and geography, which limits its exposure to the highly profitable US residential segment compared with peer Enphase. The US residential market is subject to stringent safety regulations not found in other markets. This has contributed to what is largely a duopoly (Enphase and SolarEdge have a combined 90% market share) and high levels of profitability. In addition, US-China tensions have made it difficult for Chinese competitors to enter the US market (Huawei in 2019, for example). While this has contributed to a unique market structure in the US, we do not have enough confidence that this will continue to be the case.

SolarEdge’s primary competitive advantage is its brand with installers. Having shipped its first product in 2010, the company has a long track record in the industry, and its brand is synonymous with the DC optimizer solution. We think installers consider SolarEdge products to be high quality and reasonably priced. Thus, we think installers would need to see significant savings in order to switch from a trusted brand, such as SolarEdge. We doubt this can be achieved while maintaining reliability and investments in R&D.

We do not think switching costs contribute to SolarEdge’s moat at this time. Installer-inverter supplier relationships are not exclusive, and the lack of time-intensive training for a specific brand makes it relatively easy for installers to switch. We see the potential for switching costs to increase as SolarEdge moves from a supplier of DC optimizers to a supplier of complete distributed energy solutions (inverter and optimizers, energy storage, and software monitoring), but SolarEdge is behind industry peers in this transition, and we await further data points before attributing this as a moat source.

SolarEdge is one of the largest solar inverter manufacturers in the world.

SolarEdge trades at a relative valuation discount to peer Enphase.

SolarEdge does not enjoy the same competitive position in Europe as it does in the US.

SolarEdge's acquisition track record has faced challenges.