Oppenheimer Remains Neutral on SolarEdge, Awaiting 'Concrete Validation'
SolarEdge is attempting to establish a new growth narrative beyond its traditional solar inverter and optimizer business. At its recent investor day, the company presented 2029 targets that rely on both the recovery and expansion of its core business and entry into nascent markets: energy storage and data center power systems.
While Oppenheimer analysts expressed a more positive view of the company's technological potential following the event, they maintained their 'Perform' rating and did not set a price target for the stock. The analysts emphasized that a significant portion of SolarEdge's projected upside hinges on execution, stating investors are "looking for concrete validation of the SST design and evidence of Nexis traction." This means the market seeks proof that the Solid State Transformer (SST) works commercially and that Nexis is gaining market share.
SolarEdge's primary 2029 revenue target is $2.4 billion, up from an estimated $1.29 billion for 2026. Approximately $1.8 billion is expected from the core business, representing a 12% annual growth rate, with an additional $600 million from the SST, a transformer designed for new data center power architectures. The company also aims for a 35% adjusted gross profit margin and an 18% adjusted EBITDA margin, exceeding current consensus forecasts.
The SST product is drawing considerable attention, with Oppenheimer noting it "is poised to be a meaningful player in the 800V data center market." The $600 million revenue target for 2029 suggests a market share of over 20% in a potential $2.7 billion market. Oppenheimer estimates the relevant SST market could grow from approximately $200 million in 2027 to $4.1 billion by 2030, driven by data centers' shift to 800-volt DC architectures. However, significant risks remain, as commercial activity is not expected to begin until 2028, with a working prototype targeted for late 2026 and pilots in 2027.
The second growth engine is Nexis, SolarEdge's new home energy platform. Oppenheimer highlighted its modular design and upgradeability for existing customers, of which SolarEdge has a base of approximately 4 million homes, with only 10% currently including energy storage. The company estimates Nexis technology could save customers around $7,000 over the system's lifetime, plus an additional $1,000 via its AI system, Sera.
Even in its core business, SolarEdge projects revenues of about $1.8 billion by 2029, driven by increased penetration of additional products among existing customers and expansion to new clients. Oppenheimer also noted $1.7 billion in Safe Harbor commitments through mid-2030, supporting U.S. market operations. Despite the company's ambitious plans and potential in new markets, Oppenheimer's analysis reveals a gap between SolarEdge's narrative and current market forecasts, which do not yet fully incorporate SST revenues. Until pilot programs translate into orders and revenue, Oppenheimer prefers to maintain its 'Perform' rating, anticipating performance similar to the S&P 500 over the next 12 to 18 months.
