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Results: SolarEdge Technologies, Inc. Exceeded Expectations And The Consensus Has Updated Its Estimates

Shareholders might have noticed that SolarEdge Technologies, Inc. (NASDAQ:SEDG) filed its quarterly result this time last week. The early response was not positive, with shares down 2.7% to US$281 in the past week. It looks like a credible result overall - although revenues of US$944m were what the analysts expected, SolarEdge Technologies surprised by delivering a (statutory) profit of US$2.35 per share, an impressive 64% above what was forecast. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

Check out our latest analysis for SolarEdge Technologies

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Taking into account the latest results, the consensus forecast from SolarEdge Technologies' 29 analysts is for revenues of US$4.08b in 2023, which would reflect a huge 20% improvement in sales compared to the last 12 months. Per-share earnings are expected to leap 142% to US$8.54. In the lead-up to this report, the analysts had been modelling revenues of US$4.11b and earnings per share (EPS) of US$6.97 in 2023. Although the revenue estimates have not really changed, we can see there's been a sizeable expansion in earnings per share expectations, suggesting that the analysts have become more bullish after the latest result.

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The consensus price target was unchanged at US$372, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic SolarEdge Technologies analyst has a price target of US$452 per share, while the most pessimistic values it at US$277. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. We can infer from the latest estimates that forecasts expect a continuation of SolarEdge Technologies'historical trends, as the 28% annualised revenue growth to the end of 2023 is roughly in line with the 27% annual revenue growth over the past five years. Compare this with the broader industry, which analyst estimates (in aggregate) suggest will see revenues grow 12% annually. So although SolarEdge Technologies is expected to maintain its revenue growth rate, it's definitely expected to grow faster than the wider industry.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards SolarEdge Technologies following these results. Fortunately, they also reconfirmed their revenue numbers, suggesting sales are tracking in line with expectations - and our data suggests that revenues are expected to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for SolarEdge Technologies going out to 2025, and you can see them free on our platform here.

Plus, you should also learn about the 1 warning sign we've spotted with SolarEdge Technologies .

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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