TD Cowen has increased its price target for SolarEdge Technologies (NASDAQ: SEDG) to $43 from $38 and reiterated a Buy recommendation on the shares. The adjustment reflects the firms view of improving profitability metrics reported in SolarEdge's fourth-quarter 2025 results and a continuing pathway to operational leverage.
Performance and valuation context
InvestingPro data referenced by the analyst notes that SEDG appears slightly undervalued at current market levels. That assessment comes even as the stock has experienced substantial movement over the past year, with shares up 78.81% amid notable volatility.
Quarterly results and profitability targets
TD Cowen highlighted SolarEdge's fourth-quarter 2025 results, pointing to a further improvement in gross margin to 16.64% and the achievement of positive free cash flow. Company management is publicly targeting EBIT profitability later in the year; however, InvestingPro analysis cited by the firm indicates that consensus analyst models do not project full-year profitability for the company.
Drivers of margin expansion
The analyst named three primary contributors to margin improvement and share gains: exports, the Nexis product line, and a move toward a single SKU strategy. TD Cowen also described the solid-state transformer (SST) opportunity as attractive, with the potential for a production ramp in 2028.
Analyst rationale and valuation basis
In explaining the shift in stance, the analyst said: "Shifting to Offense with Attractive SST Opportunity; SolarEdge's 4Q25 results were highlighted by continued gross margin improvement and positive FCF, with management targeting EBIT profitability later this year. Exports, Nexis, and single SKU remain drivers for margin expansion and share gains." The raised price objective is grounded in a 15 times 2027 enterprise value to EBITDA valuation multiple.
Market reaction and recent company results
Separately, SolarEdge reported fourth-quarter results that exceeded analyst expectations, according to the reporting cited by TD Cowen. The company displayed continued improvement in profit margins despite revenue headwinds, a development that was received favorably by analysts and investors. Specific figures beyond those already cited were not disclosed in the summary of results, though the commentary emphasized the positive reception to the earnings announcement.
Outlook and monitoring
TD Cowen's upgrade of the price target and continued Buy rating reflect an emphasis on improving margin dynamics and selective product opportunities such as SST. Market participants and industry observers are continuing to monitor SolarEdge's path to sustained profitability and the timing of any SST ramp in 2028.
Key points
- TD Cowen raised its SolarEdge price target to $43 from $38 while maintaining a Buy rating.
- Fourth-quarter 2025 results showed gross margin improvement to 16.64% and positive free cash flow; management is targeting EBIT profitability later this year.
- Drivers cited for margin expansion include exports, Nexis, and a single SKU strategy; SST opportunity could ramp in 2028.
Risks and uncertainties
- Despite managements EBIT target, InvestingPro analysis indicates analysts do not expect full-year profitability, creating uncertainty about when SolarEdge will be profitable for a full fiscal year.
- The company faces revenue challenges even as margins improve, which could constrain overall profitability and cash generation if revenue headwinds persist.
- The SST opportunity, while attractive to TD Cowen, is noted as a potential ramp in 2028 and therefore carries timing and execution risk.