Why Investor Love Dimmed for SolarEdge Technologies on Thursday

One of the sharper investor retreats on the stock market Thursday belonged to SolarEdge Technologies (NASDAQ: SEDG).

A day after the solar company's shares rocketed 24% higher thanks to a well-received quarterly earnings release, they headed earthward again to close more than 7% lower in price. That was a far steeper fall than Thursday's 0.4% stumble of the bellwether S&P 500 index.

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Two thumbs down

As often occurs in the wake of an earnings release, a clutch of analysts raced to adjust their takes on SolarEdge Thursday. Most increased their price targets, but these bullish moves were more than offset by not one, but two, recommendation downgrades.

The first came from Northland pundit Gus Richard, who now rates SolarEdge as an underperform (sell, in other words) worth $15 per share. Richard previously ranked the solar company as market perform (hold).

According to reports, Richard's takeaway from the fourth quarter and full-year report was that the company is lagging in crucial aspects of its business. These include such elements as customer service, new product development, and reliability.

Striking a similarly bearish note, BMO Capital also lowered its recommendation one peg to the equivalent of sell, matching Richard's price target of $15 per share. According to reports, in the researcher's opinion, the immediate post-earnings rally on Wednesday was due more to short covering than genuine enthusiasm for the company's prospects.

The immediate future might not be bright

The solar energy sector has always been at least a bit wobbly, so business continues to be challenging for component makers such as SolarEdge that sell into it. Compounding that, the current presidential administration in the U.S. seems to favor more traditional means of energy production, which, if it filters down into policy, could present another roadblock for solar generally.

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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.