Shares of SolarEdge Technologies Inc (NASDAQ:SEDG) spiked in early trading on Monday, after plummeting over the past month on the company's announcement of a $300 million private offering.

The stock is trading at five-year lows, following the second-quarter guidance miss, underperforming Enphase Energy Inc (NASDAQ:ENPH) and its solar peers by around 50% year to date, according to BofA Securities.

The SolarEdge Technologies Analyst: Dimple Gosai upgrades the rating from Underperform to Neutral, while slashing the price target from $44 to $29.

The SolarEdge Technologies Thesis: Following the recent pullback, the stock is pricing in a worst-case scenario of inventory writedowns, no recovery in the inventory channel congestion through 2025 and the inability to monetize the balance sheet, Gosai said in the upgrade note.

Check out other analyst stock ratings.

This worst-case scenario is "unlikely," she added.

While the European market "continues to face substantial inventory headwinds" and there is soft demand in the U.S., which could impact sales for the rest of this year, SolarEdge Technologies could return to profitability in the first half of 2025, the analyst stated.

The company may find it difficult to manage cash, with higher working capital required due to the slower inventory turnover and credit extensions, but the $300 million in convertible notes should help alleviate balance sheet concerns in the near term, she further stated.

SEDG Price Action: Shares of SolarEdge Technologies had risen by 12.3% to $28.15 at the time of publication on Monday.

• Apple, Microsoft, Meta, Google Stocks Hit 52-Week Highs: Which Is The Best Investment?