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SolarEdge has been on a tear since the beginning of the year yielding investors over 120% returns. Sell-side analysts are becoming increasingly optimistic about this stock, substantially raising their EPS estimates, and propelling SEDG in Zacks Rank #1 (Strong Buy).
The Business
SolarEdge produces solar optimizers, which maximizes the amount of energy that each solar module (panel) can harvest. The company also makes inverters for solar modules that convert the direct electric current from the panel to an alternative current for residential and commercial use. These two segments make up roughly 90% of SolarEdge’s revenue.
The firm has been investing more and more into its monitoring software and solutions segments. According to the most recent annual report, “Our cloud-based monitoring platform collects power, voltage, current and system data sent from our inverters and power optimizers and allows users to view the data at the module level, string level, inverter level and system level from any browser or from most smart phones and tablets.”
This cloud-based segment has been making up an increasing percentage of the SolarEdge’s business as more and more firms see the utility in this novel technology.
SolarEdge’s innovative drive has paved the way for the firm to be one of the most utilized in the solar business.
Performance
Renewable energy is the future of energy and the costs associated with producing this type of energy continue to fall. As solar panels and related costs drop the demand will increase.
SolarEdge has already benefited from this expansion in recent years with topline growth figures beginning to proliferate. Its dedicated research team ensures that their products are the ahead of the curve.
SolarEdge has demonstrated consistent, strong double-digit year-over-year revenue growth and relentless quarter-over-quarter expansions. In 2018 alone SolarEdge experienced 54% topline appreciation. Analysts are anticipating another 49% revenue growth for 2019.
This past quarter the firm illustrated 19.5% quarter-over-quarter sales growth on top of 43.1% year-over-year growth further proving the firm’s ability to beat expectations.
Currently, about 60% of the firm’s sales are done outside the United States but this figure could reverse soon as more people transition to renewable energy.
According to Solar Energy Industries Association, the US is expected to add 25% more solar capacity in 2019 and expecting to accelerate as the costs of this technology comes down. The capacity is expected to more than double in the next 5 years, which should open the US market right up for SolarEdge to take advantage of.
Recent News
The CEO of SolarEdge, Guy Sella, died this past weekend after reporting last Thursday that he would be taking a leave of absence due to health conditions. SolarEdge shares fell 8% Thursday (8/22) following Guy Sella’s announced leave.
Sella was diagnosed with colon cancer back in fall of 2017, but it was said to be at a treatable stage. Sella’s condition deteriorated quickly this weekend and he passed away on Sunday. Expect the share price to fall even further in trading this next week.
This could create a buying opportunity when the stock price levels out. The infrastructure of the business is still fully intact as well as the innovative moral that Sella instilled into SolarEdge from the beginning.
Take Away
There is a global push to make 50% of the world’s total energy production originate from a renewable source by 2050. These sources being primarily wind and solar energy. The project is going to cost the world more than $10 trillion to complete in that time frame and will give firms like SolarEdge the momentum they to drive a thriving business.
If SolarEdge doesn’t lose its innovative leadership with the untimely death of its inspiring CEO, I think the future is very bright for this solar energy company.
Qualcomm had a disappointing June quarter earnings with management significantly lowering guidance. Management sees slowing phone sales and trade headwinds as the catalysts for a disappointing year. Sell-side analysts have been dropping EPS estimates throwing QCOM into a Zacks Rank #5 (Strong Sell).
Qualcomm is facing quite a few long-term headwinds, with its licensing business being under FTC scrutiny and disruptions with some of the company’s largest customers.
Qualcomm is on the verge of losing two of its largest customers. Huawei has been blacklisted in the US banning companies to do business with them. Being a major revenue driver of Qualcomm, this has already started to negatively impact its financials and if an agreement can not be made this could have long-run detrimental effects. The increasing tension between the US and China isn’t providing any help to Qualcomm’s outlook.
Apple is another one of QCOM’s largest customers and they are in late states talks with Intel to buy out their 5G modem business. This would cut Qualcomm out of America’s largest smartphone manufacture’s long-term strategy.
Licensing Issues
Judge Lucy Koh made a stock killing verdict on May 22nd, claiming that Qualcomm is participating in unfair practices involving its patent licensing. If the ruling stands, the firm will be forced to renegotiate licensing terms that would be considerably less profitable.
This is following a sweeping win by Qualcomm over a dispute with Apple regarding chip royalties. Apple settled the suit by agreeing to pay Qualcomm between $5-$6 billion in additional licensing fees in order to gain access to the firms 5G smartphone chips. Apple is now in talks with Intel to buy their 5G chip business and cut Qualcomm entirely out of the equation.
Qualcomm’s patents are its most substantial income driving assets. Licensing makes up the majority of the company’s operating profits. Disrupting this business segment would significantly impact the firm’s profitability.
Qualcomm has agreements on the verge of expiration and will be forced to renegotiate them under the FTC’s terms if they are unable to get the ruling reversed.
Take Away
This company doesn’t have any systemic issues that I am afraid of other than its reliance on licensing profits. Qualcomm has experienced very unfortunate circumstances in the political space. It will continue to punish the firm if they are unable to work around the issues. Declining smartphone sales isn’t doing the company any favors either.
The current issues that the firm is facing with the loss of customers and limited licensing profitability, could have a significant downside to QCOM if issues are not resolved.
Additional content:
Telecom Carriers Collaborate with States to Thwart Robocalls
Leading domestic telecom carriers have joined forces to clamp down on robocalls or unwanted phone calls, and have struck an agreement with attorney generals of all the states and the District of Columbia. The deal is aimed to shield consumers from this growing menace and eliminate the root cause by empowering law enforcement agencies to investigate and prosecute the perpetrators.
The move seems to be a major step in a synchronized attack on this perennial problem, as the Congress and the Federal Communications Commission (“FCC”) have also embarked on decisive actions to curb unsolicited calls. Before we take a closer look at these measures, let us dig a little deep into these spoofed calls.
Robocalls: A Growing Menace
A robocall is an unsolicited phone call that typically uses a pre-recorded message like that delivered by a robot to market various products and services or serve reminders for pharmacy visits or debt payments. Using an automated dialing system, these calls are made without customer consent and are often viewed as irritants as customers are bombarded with thousands of such calls on a day. Per data from YouMail Inc., a developer of software that blocks the calls, about 48 billion robocalls were made last year, up from 31 billion in 2017, which translates to 4 billion robocalls a month.
In addition to infringement on customer privacy, robocalls try to siphon off personal data to con individuals. This eventually has led to several scams, robbing unsuspecting customers of their hard-earned money.
Preventive Measures Already in Place
In order to prevent customers from receiving spurious calls, several telecom players have come up with innovative solutions through their bundled offers or supported apps. AT&T provides a blocking app and service called Call Protect that detects and blocks fraudulent calls, flags spam calls as “Suspected Spam” when the phone rings, and helps to maintain a personal block list. The service is likely to be enabled for new customers as a default in the near future followed by a similar such measure in existing customers.
Verizon Communications Inc. offers a free version of its Call Filter service in compatible phones and postpaid plans that tries to detect and filter spam calls. In addition to alerting users, it reports unsolicited numbers and blocks them. T-Mobile US Inc. offers Scam ID and Scam Block features free to all its postpaid and Metro customers. While Scam ID helps to identify potential scammers, Scam Block helps to block all likely scammers even before the call comes in.
The Deal
Responding to the call of the hour, 12 leading telecom players have collaborated to ink an agreement with the states to launch free call-blocking technology and make other free anti-robocall devices and apps available to subscribers. These are AT&T, Verizon, T-Mobile, CenturyLink Inc., Comcast Corp., Sprint Corp., Bandwidth Inc., Charter Communications Inc., Consolidated Communications Holdings Inc., Frontier Communications Corp., U.S. Cellular Corp. and Windstream Holdings Inc. The agreement reinforces their earlier pledge to set up updated technology by the end of the year in response to an appeal by the FCC to curb the exponential growth of robocalls.
FCC & Congress Pitch In
The FCC has proposed a couple of measures to end the unsolicited robocalls that users have to constantly grapple with. These include creation of a national database of disconnected phone numbers that are reassigned to other users to avoid dialing the wrong customers repeatedly and enabling telecom service providers to block and filter text messages deemed as spam. The FCC has also demanded a digital validation by carriers to curb this menace.
Meanwhile, the Congress has passed the Telephone Robocall Abuse Criminal Enforcement and Deterrence Act by an overwhelming majority in the Senate, followed by an almost unanimous approval of the Stopping Bad Robocalls Act in the House. The Senate bill will facilitate to protect consumers from spoofed calls with fake caller IDs. The House bill aims to stop the unwanted robocalls from being made in the very first instance by strengthening the Telephone Consumer Protection Act, which ensures that these callers must have consent from consumers before dialing.
With both bills likely signed into law and telecom carriers working in unison with states, robocalls are expected to be significantly curbed the in the near future. New York Attorney General Letitia James perfectly observed, “The bad actors running these deceptive operations will soon have one call left to make: to their lawyers.”
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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SolarEdge, Qualcomm, AT&T, Verizon Communications and T-Mobile US highlighted as Zacks Bull and Bear of the Day
For Immediate Release
Chicago, IL – August 26, 2019 – Zacks Equity Research Shares of SolarEdge (SEDG - Free Report) as the Bull of the Day, Qualcomm (QCOM - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on AT&T (T - Free Report) , Verizon Communications Inc. (VZ - Free Report) and T-Mobile US Inc. (TMUS - Free Report) .
Here is a synopsis of all five stocks:
Bull of the Day:
SolarEdge has been on a tear since the beginning of the year yielding investors over 120% returns. Sell-side analysts are becoming increasingly optimistic about this stock, substantially raising their EPS estimates, and propelling SEDG in Zacks Rank #1 (Strong Buy).
The Business
SolarEdge produces solar optimizers, which maximizes the amount of energy that each solar module (panel) can harvest. The company also makes inverters for solar modules that convert the direct electric current from the panel to an alternative current for residential and commercial use. These two segments make up roughly 90% of SolarEdge’s revenue.
The firm has been investing more and more into its monitoring software and solutions segments. According to the most recent annual report, “Our cloud-based monitoring platform collects power, voltage, current and system data sent from our inverters and power optimizers and allows users to view the data at the module level, string level, inverter level and system level from any browser or from most smart phones and tablets.”
This cloud-based segment has been making up an increasing percentage of the SolarEdge’s business as more and more firms see the utility in this novel technology.
SolarEdge’s innovative drive has paved the way for the firm to be one of the most utilized in the solar business.
Performance
Renewable energy is the future of energy and the costs associated with producing this type of energy continue to fall. As solar panels and related costs drop the demand will increase.
SolarEdge has already benefited from this expansion in recent years with topline growth figures beginning to proliferate. Its dedicated research team ensures that their products are the ahead of the curve.
SolarEdge has demonstrated consistent, strong double-digit year-over-year revenue growth and relentless quarter-over-quarter expansions. In 2018 alone SolarEdge experienced 54% topline appreciation. Analysts are anticipating another 49% revenue growth for 2019.
This past quarter the firm illustrated 19.5% quarter-over-quarter sales growth on top of 43.1% year-over-year growth further proving the firm’s ability to beat expectations.
Currently, about 60% of the firm’s sales are done outside the United States but this figure could reverse soon as more people transition to renewable energy.
According to Solar Energy Industries Association, the US is expected to add 25% more solar capacity in 2019 and expecting to accelerate as the costs of this technology comes down. The capacity is expected to more than double in the next 5 years, which should open the US market right up for SolarEdge to take advantage of.
Recent News
The CEO of SolarEdge, Guy Sella, died this past weekend after reporting last Thursday that he would be taking a leave of absence due to health conditions. SolarEdge shares fell 8% Thursday (8/22) following Guy Sella’s announced leave.
Sella was diagnosed with colon cancer back in fall of 2017, but it was said to be at a treatable stage. Sella’s condition deteriorated quickly this weekend and he passed away on Sunday. Expect the share price to fall even further in trading this next week.
This could create a buying opportunity when the stock price levels out. The infrastructure of the business is still fully intact as well as the innovative moral that Sella instilled into SolarEdge from the beginning.
Take Away
There is a global push to make 50% of the world’s total energy production originate from a renewable source by 2050. These sources being primarily wind and solar energy. The project is going to cost the world more than $10 trillion to complete in that time frame and will give firms like SolarEdge the momentum they to drive a thriving business.
If SolarEdge doesn’t lose its innovative leadership with the untimely death of its inspiring CEO, I think the future is very bright for this solar energy company.
Bear of the Day:
Qualcomm had a disappointing June quarter earnings with management significantly lowering guidance. Management sees slowing phone sales and trade headwinds as the catalysts for a disappointing year. Sell-side analysts have been dropping EPS estimates throwing QCOM into a Zacks Rank #5 (Strong Sell).
Qualcomm is facing quite a few long-term headwinds, with its licensing business being under FTC scrutiny and disruptions with some of the company’s largest customers.
Qualcomm is on the verge of losing two of its largest customers. Huawei has been blacklisted in the US banning companies to do business with them. Being a major revenue driver of Qualcomm, this has already started to negatively impact its financials and if an agreement can not be made this could have long-run detrimental effects. The increasing tension between the US and China isn’t providing any help to Qualcomm’s outlook.
Apple is another one of QCOM’s largest customers and they are in late states talks with Intel to buy out their 5G modem business. This would cut Qualcomm out of America’s largest smartphone manufacture’s long-term strategy.
Licensing Issues
Judge Lucy Koh made a stock killing verdict on May 22nd, claiming that Qualcomm is participating in unfair practices involving its patent licensing. If the ruling stands, the firm will be forced to renegotiate licensing terms that would be considerably less profitable.
This is following a sweeping win by Qualcomm over a dispute with Apple regarding chip royalties. Apple settled the suit by agreeing to pay Qualcomm between $5-$6 billion in additional licensing fees in order to gain access to the firms 5G smartphone chips. Apple is now in talks with Intel to buy their 5G chip business and cut Qualcomm entirely out of the equation.
Qualcomm’s patents are its most substantial income driving assets. Licensing makes up the majority of the company’s operating profits. Disrupting this business segment would significantly impact the firm’s profitability.
Qualcomm has agreements on the verge of expiration and will be forced to renegotiate them under the FTC’s terms if they are unable to get the ruling reversed.
Take Away
This company doesn’t have any systemic issues that I am afraid of other than its reliance on licensing profits. Qualcomm has experienced very unfortunate circumstances in the political space. It will continue to punish the firm if they are unable to work around the issues. Declining smartphone sales isn’t doing the company any favors either.
The current issues that the firm is facing with the loss of customers and limited licensing profitability, could have a significant downside to QCOM if issues are not resolved.
Additional content:
Telecom Carriers Collaborate with States to Thwart Robocalls
Leading domestic telecom carriers have joined forces to clamp down on robocalls or unwanted phone calls, and have struck an agreement with attorney generals of all the states and the District of Columbia. The deal is aimed to shield consumers from this growing menace and eliminate the root cause by empowering law enforcement agencies to investigate and prosecute the perpetrators.
The move seems to be a major step in a synchronized attack on this perennial problem, as the Congress and the Federal Communications Commission (“FCC”) have also embarked on decisive actions to curb unsolicited calls. Before we take a closer look at these measures, let us dig a little deep into these spoofed calls.
Robocalls: A Growing Menace
A robocall is an unsolicited phone call that typically uses a pre-recorded message like that delivered by a robot to market various products and services or serve reminders for pharmacy visits or debt payments. Using an automated dialing system, these calls are made without customer consent and are often viewed as irritants as customers are bombarded with thousands of such calls on a day. Per data from YouMail Inc., a developer of software that blocks the calls, about 48 billion robocalls were made last year, up from 31 billion in 2017, which translates to 4 billion robocalls a month.
In addition to infringement on customer privacy, robocalls try to siphon off personal data to con individuals. This eventually has led to several scams, robbing unsuspecting customers of their hard-earned money.
Preventive Measures Already in Place
In order to prevent customers from receiving spurious calls, several telecom players have come up with innovative solutions through their bundled offers or supported apps. AT&T provides a blocking app and service called Call Protect that detects and blocks fraudulent calls, flags spam calls as “Suspected Spam” when the phone rings, and helps to maintain a personal block list. The service is likely to be enabled for new customers as a default in the near future followed by a similar such measure in existing customers.
Verizon Communications Inc. offers a free version of its Call Filter service in compatible phones and postpaid plans that tries to detect and filter spam calls. In addition to alerting users, it reports unsolicited numbers and blocks them. T-Mobile US Inc. offers Scam ID and Scam Block features free to all its postpaid and Metro customers. While Scam ID helps to identify potential scammers, Scam Block helps to block all likely scammers even before the call comes in.
The Deal
Responding to the call of the hour, 12 leading telecom players have collaborated to ink an agreement with the states to launch free call-blocking technology and make other free anti-robocall devices and apps available to subscribers. These are AT&T, Verizon, T-Mobile, CenturyLink Inc., Comcast Corp., Sprint Corp., Bandwidth Inc., Charter Communications Inc., Consolidated Communications Holdings Inc., Frontier Communications Corp., U.S. Cellular Corp. and Windstream Holdings Inc. The agreement reinforces their earlier pledge to set up updated technology by the end of the year in response to an appeal by the FCC to curb the exponential growth of robocalls.
FCC & Congress Pitch In
The FCC has proposed a couple of measures to end the unsolicited robocalls that users have to constantly grapple with. These include creation of a national database of disconnected phone numbers that are reassigned to other users to avoid dialing the wrong customers repeatedly and enabling telecom service providers to block and filter text messages deemed as spam. The FCC has also demanded a digital validation by carriers to curb this menace.
Meanwhile, the Congress has passed the Telephone Robocall Abuse Criminal Enforcement and Deterrence Act by an overwhelming majority in the Senate, followed by an almost unanimous approval of the Stopping Bad Robocalls Act in the House. The Senate bill will facilitate to protect consumers from spoofed calls with fake caller IDs. The House bill aims to stop the unwanted robocalls from being made in the very first instance by strengthening the Telephone Consumer Protection Act, which ensures that these callers must have consent from consumers before dialing.
With both bills likely signed into law and telecom carriers working in unison with states, robocalls are expected to be significantly curbed the in the near future. New York Attorney General Letitia James perfectly observed, “The bad actors running these deceptive operations will soon have one call left to make: to their lawyers.”
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
Click for details >>
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Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.