12:24 PM EDT, 07/08/2024 (MT Newswires) -- SolarEdge Technologies' ( SEDG ) current share price slump is factoring in an "unlikely worst-case scenario" of inventory writedowns and liquidity challenges, BofA Securities said in a note Monday.

Residential demand is softening and the European market is still facing substantial inventory headwinds. There is a concern that inventory congestion and reduced sales may persist throughout the year, delaying a return to profitability until H1 2025.

Managing cash flow has become complicated because of slower inventory turnover and extended credit terms. However, its $300 million convertible debt should provide relief to near-term balance sheet concerns, BofA said.

BofA believes the company will return to profitability in 2025 and current stock price decline to be based on an unlikely scenario.

The brokerage upgraded SolarEdge ( SEDG ) to neutral from underperform with a price objective of $29.

Price: 27.81, Change: +2.76, Percent Change: +11.02