The company reported adjusted earnings of 36 cents per share and revenues of $115.1 million for the first quarter. A consensus of analysts surveyed by FactSet anticipated earnings of 26 cents per share on revenues of $114.3 million.
JMP Securities analyst Joseph Osha continues to be impressed by how solidly SolarEdge is performing in this tough solar market.
The analyst raised his price target on SolarEdge's stock to $22 per share from $19 per share in a Wednesday morning research note and said the company beat the firm's expectations at the top and bottom line.
We knew that the operating environment in the March quarter was tough, and the fact that SEDG managed to post a modest 3% sequential increase in revenue is notable," Osha wrote.
In contrast, SolarEdge's main competitor Enphase Energy (ENPH) - Get Report posted a 40% sequential decline in revenue over the same period, the analyst explained. Enphase was down a little under 4% shortly after the opening bell Wednesday.
"[SolarEdge] did well this quarter despite a tough operating environment in the U.S., especially California," Osha wrote. "The company is in an excellent competitive position in a market that has proven far more difficult to penetrate than many expected."
SolarEdge reported operating income of $12 million, net income of $14.2 million and a gross margin for the quarter of 33.6%.
JMP sees steady progress in commercial-scale systems as a strong driver to this quarter's solid numbers.
"SEDG cannot compete at the utility scale, but it is apparent that the company's architecture is making real inroads outside of residential," Osha said Wednesday.
Goldman Sachs analysts are not so convinced the good tidings will keep on rolling for this stock. The firm reiterated its Sell rating Wednesday as it believes SolarEdge's EPS power remains at risk, perhaps especially because of its dependency on the U.S. residential market.
Topline challenges due to a tough U.S residential solar market backdrop and looming competitive pressures in the second half of this year have only been somewhat offset by the company's best efforts to navigate with lower costs, Goldman's Brian Lee wrote in a Wednesday note.
The firm does see share gains in non-U.S. and commercial markets helping the company this quarter, but question its sustainability given a global solar demand backdrop, including China, which is set to decline year over year.
Goldman noted SolarEdge's core U.S. market still accounts for 64% of its sales and said this market is set to be down more significantly for the company than most markets given the company's share loss.
Meanwhile, members of the broader solar industry continue to struggle during the sector's most recent downturn. SunPower (SPWR) - Get Report reported earnings that beat analysts' expectations but opened down more than 2% after losing 6% in the premarket.
Sunpower reported a loss of 36 cents per share versus consensus, which called for a loss of 49 cents per share.
As Osha pointed out, structural problems remain for SunPower, and his firm sees no major signs of a change in strategy despite its belief that SunPower's chances of returning to competitiveness in the utility-scale solar market are fading.
Credit Suisse analyst Andrew Hughes agrees that the company's strategy has some issues, particularly in the near term.
"Management's focus on its residential and commercial segments as well as a less capital-intensive manufacturing strategy makes sense long-term," Hughes wrote in a Wednesday research note. "Near-term the plan confronts potential challenges."
Tax reform and trade issues could be particularly stressful for SunPower's U.S. distributed generation business, according to Hughes, who said: "allocating even small amounts of capital to expand capacity in China could prove problematic if trade concerns mount."